Zekany Corporation would have had identical income before taxeson both its income tax returns and income statements for the years2013 through 2016 except for differences in depreciation on anoperational asset. The asset cost $190,000 and is depreciated forincome tax purposes in the following amounts:

2013 $ 62,700 2014 83,600 201528,500 2016 15,200

The operational asset has afour-year life and no residual value. The straight-line method isused for financial reporting purposes. Income amounts beforedepreciation expense and income taxes for each of the four yearswere as follows. 2013 2014 2015 2016 Accounting income before taxesand depreciation $ 105,000 $ 125,000 $ 115,000 $ 115,000 Assume theaverage and marginal income tax rate for 2013 and 2014 was 30%;however, during 2014 tax legislation was passed to raise the taxrate to 40% beginning in 2015. The 40% rate remained in effectthrough the years 2015 and 2016. Both the accounting and income taxperiods end December 31. Required: Prepare the journal entries torecord income taxes for the years 2013 through 2016. (If no entryis required for a particular transaction, select "No journal entryrequired" in the first account field.)

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_{Zekany Corporation would have had identical income beforetaxes on both its income tax returns and income statements for theyears 2013 through 2016 except for differences in depreciation onan operational asset. The asset cost $250,000 and is depreciatedfor income tax purposes in the following amounts:}


₂₀₁₃	_$	_82,500
₂₀₁₄		_110,000
₂₀₁₅		_37,500
₂₀₁₆		_20,000

_{The operational asset has afour-year life and no residual value. The straight-line method isused for financial reporting purposes.}

_{Income amounts beforedepreciation expense and income taxes for each of the four yearswere as follows.}

₂₀₁₃

₂₀₁₄

₂₀₁₅

₂₀₁₆

_{Accountingincome before taxes and depreciation}

_135,000

_155,000

_145,000

_{Assume the average and marginal income tax rate for 2013and 2014 was 30%; however, during 2014 tax legislation was passedto raise the tax rate to 40% beginning in 2015. The 40% rateremained in effect through the years 2015 and 2016. Both theaccounting and income tax periods end December 31.}

_Required:

_{Prepare the journal entries to record income taxes for theyears 2013 through 2016. (If no entry is required for aparticular transaction, select "No journal entry required" in thefirst account field.)}

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1. Make all adjustments on the "Adjusting Journal Entries". Remember to include a description under each journal entry.

12	. On 1/1/14, ABC Corporation purchased, as a held-to-maturity investment, $200,000 of the 8%, 5-year bonds of Intuit Corporation for $177,824,
	which provides an 11% return. Prepare ABC's 12/31/14 journal entry to reflect the receipt of annual interest and discount amortization.
	Assume the bond investment pays interest annually on 12/31 each year and that effective interest amortization is used.
	Note: Notice that a discount account is not used for this investment. Therefore, for purposes of this adjusting entry, amortize the discount directly to the
	investment account.


13.	ABC Corporation prepares an aging schedule on 12/31/14 that estimates total uncollectible accounts at $25,000. Assuming that the allowance method is used,
	prepare the entry to record bad debt expense.


14	On 1/1/14, ABC Corporation signed a 5-year noncancelable lease for a delivery vehicle. The terms of the lease called for ABC to Corporation to make
	annual payments of $10,503 at the beginning of each year, starting January 1, 2014. The delivery vehicle has an estimated useful life of 6 years and a $7,000
	unguaranteed residual value. The delivery vehicle reverts back to the lessor at the end of the lease term. ABC Corporation uses the straight-line method
	of depreciation for the delivery vehicle. ABC Corporation's incremental borrowing rate is 10%, and the Lessor's implicit rate is unknown. No entries have yet
	been made concerning this lease arrangement. After determining the type of lease arrangement (capital or operating), prepare the necessary multiple-part journal
	entry for 2014 for ABC Corporation. (Hints: You will need to compute the present value of the minimum lease payments and 4 separate sub-entries for
	this lease transaction. Also, for Statement of Cash Flow purposes, the principal portion of lease payments are correctly categorized as a financing activity.)


15	ABC Corporation provides a defined benefit pension plan for its employees. A combination adjusting entry should be made to correctly account for this type of pension
	plan given the following items of information for the 2014 plan year, including the recording of pension expense and the employer's contribution to the pension plan in 2014.
	Note: Use the summary entry method as demonstrated and discussed in the chapter lectures on pension accounting to prepare the adjusting entry.

	Pension asset/liability (January 1)		$0
	Actual return on plan assets		$40,000
	Expected return on plan assets		$20,000
	Contributions (funding) in 2014		$37,000
	Fair value of plan assets (December 31)		$75,000
	Settlement rate		10%
	Projected benefit obligation (January 1)		$0
	Service cost		$60,000
	Benefits paid in 2014		$0
	*For purposes of financial statement presentation, consider Pension Expense as an operating item and any resulting Pension Asset/Liability as long-term in nature.

16	On December 31, 2014, ABC Corporation issued 1,000 shares of restricted stock to its Chief Financial Officer. ABC stock had a fair value (closing market price) of
	$10 per share on December 31, 2014. Additional information is as follows:
		a. The service period related to the restricted stock is 2 years.
		b. Vesting occurs if the CFO stays with the company for a two-year period.
		c. The par value of the common stock is $3 per share.
	Make the appropriate accounting entry as of the grant date, 12/31/14. Note: use the alternative method as described in your textbook for deferred compensation.

	Do this step after preparing the Income Statement except for the Income taxes line: (You need to calculate Income Before Income Taxes in order to calcualte total Income Tax Expense)
17	Corporate taxes are due in four estimated quarterly payments on April 15, June 15, September 15, and December 15.
	However, for the purposes of this ABC illustration, we will assume that estimates are not paid, and that the tax is paid in full
	on the return's March 15, 2015 due date.
	ABC's income tax rate is 40%. The entire year's income tax expense was estimated at the beginning of 2014 to be $69,600,
	so January through November income tax expense recognized amounts to $63,800 (11/12 months).
	Since we are assuming estimates are not made during the year, the balance in Income taxes payable represents
	tax accrued for January through November. Assume no deferred tax assets or deferred tax liabilities.
	Based on the income before income taxes figure from the income statement, record December's income tax expense
	so that the entire year's total tax expense is correct.

Described below are six independent and unrelated situationsinvolving accounting changes. Each change occurs during 2016 beforeany adjusting entries or closing entries were prepared. Assume thetax rate for each company is 40% in all years. Any tax effectsshould be adjusted through the deferred tax liability account.

a.	Fleming Home Products introduced a new line of commercialawnings in 2015 that carry a one-year warranty againstmanufacturerâs defects. Based on industry experience, warrantycosts were expected to approximate 3% of sales. Sales of theawnings in 2015 were $4,400,000. Accordingly, warranty expense anda warranty liability of $132,000 were recorded in 2015. In late2016, the companyâs claims experience was evaluated and it wasdetermined that claims were far fewer than expected: 2% of salesrather than 3%. Sales of the awnings in 2016 were $4,900,000 andwarranty expenditures in 2016 totaled $111,475.
b.	On December 30, 2012, Rival Industries acquired its officebuilding at a cost of $1,180,000. It was depreciated on astraight-line basis assuming a useful life of 40 years and nosalvage value. However, plans were finalized in 2016 to relocatethe company headquarters at the end of 2020. The vacated officebuilding will have a salvage value at that time of$790,000.
c.	Hobbs-Barto Merchandising, Inc., changed inventory cost methodsto LIFO from FIFO at the end of 2016 for both financial statementand income tax purposes. Under FIFO, the inventory at January 1,2016, is $780,000.
d.	At the beginning of 2013, the Hoffman Group purchased officeequipment at a cost of $429,000. Its useful life was estimated tobe 10 years with no salvage value. The equipment was depreciated bythe sum-of-the-yearsâ-digits method. On January 1, 2016, thecompany changed to the straight-line method.
e.	In November 2014, the State of Minnesota filed suit againstHuggins Manufacturing Company, seeking penalties for violations ofclean air laws. When the financial statements were issued in 2015,Huggins had not reached a settlement with state authorities, butlegal counsel advised Huggins that it was probable the companywould have to pay $290,000 in penalties. Accordingly, the followingentry was recorded:


Lossâlitigation	290,000
Liabilityâlitigation		290,000

Late in 2016, a settlement wasreached with state authorities to pay a total of $449,000 inpenalties.

At the beginning of 2016, Jantzen Specialties, which uses thesum-of-the-yearsâ-digits method, changed to the straight-linemethod for newly acquired buildings and equipment. The changeincreased current year net earnings by $544,000.

Prepare any journal entry necessary as a direct result of thechange as well as any adjusting entry for 2016 related to thesituation described. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field.)