On January 1, 2024, Blossom Corporation had retained earnings of $600,000. During the year, Blossom had the following selected transactions: 1. 2. 3. 4. 5. Declared and paid cash dividends, $245,000. Earned profit before income tax, $750,000. Corrected a prior period error of $85,000, before income tax, which resulted in an understatement of profit in 2023. Reacquired 20,000 common shares for $50,000 more than the original issue price. This was the first time the company had ever reacquired its own shares. Completed a 3-for-1 stock split of the common shares. Blossom has a 25% income tax rate and reports under ASPE.

On January 1, 2024, Blossom Corporation had retained earnings of $600,000. During the year, Blossom had the following selected transactions: 1. 2. 3. 4. 5. Declared and paid cash dividends, $245,000. Earned profit before income tax, $750,000. Corrected a prior period error of $85,000, before income tax, which resulted in an understatement of profit in 2023. Reacquired 20,000 common shares for $50,000 more than the original issue price. This was the first time the company had ever reacquired its own shares. Completed a 3-for-1 stock split of the common shares. Blossom has a 25% income tax rate and reports under ASPE.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...

See similar textbooks

Similar questions

Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Refer to the information for Juroe Company on the previous page. Also, assume that Juroes total assets at the beginning of last year equaled 17,350,000 and that the tax rate applicable to Juroe is 40%. Required: Note: Round answers to two decimal places. 1. Calculate the average total assets. 2. Calculate the return on assets.
Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)
Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of $160,000 for 2019. The corporation also has $30,000 in dividends from publicly traded domestic corporations in which the ownership percentage was 45 percent. Calculate the corporation's dividends received deduction for 2019. $_____________ Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $135,000. Calculate the corporation's dividends received deduction for 2019. $___________ Assume that instead of $210,000, Fisafolia Corporation has gross income from operations of $158,000. Calculate the corporation's dividends received deduction for 2019. $_____________
Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are 295,000), the following items are included in this pretax income: Colts taxable income totals 93,000 in 2019. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2019, Colt had a retained earnings balance of 310.000 and a deferred tax liability of 8,100. During 2019, Colt declared and paid dividends of 48,000. It is subject to tax rates of 15% on the first 50,000 of income and 30% on income in excess of 50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2019 ending deferred tax liability is 14,100. Required: 1. Prepare a schedule for Colt to allocate the total 2019 income tax expense to the various components of pretax income. 2. Prepare Colts income tax journal entry at the end of 2019. 3. Prepare Colts 2019 income statement. 4. Prepare Colts 2019 statement of retained earnings. 5. Show the related income tax disclosures on Colts December 31, 2019, balance sheet.
In the current year, Madison Corporation had 50,000 of taxable income at a tax rate of 25%. During the year, Madison began offering warranties on its products and has a Warranty liability for financial reporting purposes of 5,000 at the end of the year. Warranty expenses are not deductible until paid for income tax purposes. Prepare the journal entry to record Madisons income taxes at the end of the year.
The records of Culver Corp. for calendar 2023 reflected the following correct pre-tax amounts: gain from discontinued operations, $44,000; cash dividends declared and paid, $39,600; retained earnings, January 1, 2023, $242,000, correction of accounting error, $30,800 debit; income before income taxes and before discontinued operations, $145,200. The average income tax rate of 40 % applies to all items except the dividends. Calculate the December 31, 2023 ending balance of retained earnings. Ending balance of retained earnings
Wildhorse Corporation has retained earnings of $677,100 at January 1, 2020. Net income during 2020 was $1,511,100, and cash dividends declared and paid during 2020 totaled $81,600. Prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $87,330 (net of tax) was charged to maintenance and repairs expense in 2019. (List items that increase retained earnings first.) WILDHORSE CORPORATIONRetained Earnings Statementchoose the accounting period December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020 select an opening name Correction for Overstatement of Expenses in Prior PeriodCash DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, as AdjustedRetained Earnings, January 1, as ReportedRetained Earnings, December 31RevenuesTotal ExpensesTotal Revenues…
Metlock Corporation has retained earnings of $681,500 at January 1, 2020. Net income during 2020 was $1,434,800, and cash dividends declared and paid during 2020 totaled $81,300. Prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $88,800 (net of tax) was charged to maintenance and repairs expense in 2019.
Blue Corporation has retained earnings of $689,900 at January 1, 2020. Net income during 2020 was $1,529,000, and cash dividends declared and paid during 2020 totaled $80,700. Prepare a retained earnings statement for the year ended December 31, 2020. Assume an error was discovered: land costing $87,420 (net of tax) was charged to maintenance and repairs expense in 2019. (List items that increase retained earnings first.)
The following information relates to Sandhill Corporation's transactions during 2023, its first year of operations. 1. 2. 3. 4. 5. 6. Income before income tax on the income statement for 2023 was $56,000. Income before income tax ($56,000 above) is net of a loss due to the writedown of land of $48,000. Sandhill reported a tax-deductible financing charge of $6,300 on its 2023 statement of retained earnings. The charge is for interest on a financial instrument that is legally debt, but in substance is equity for financial reporting purposes. The tax rate enacted for 2023 and future years is 30%. Because this was Sandhill's first taxation year, no instalments on account of income taxes were required or paid by Sandhill. Differences between the 2023 GAAP amounts and their treatment for tax purposes were as follows: a. Warranty expense accrued for financial reporting purposes amounted to $16,000. Warranty payments deducted for taxes amounted to $12,800. Warranty liabilities were classified…
Oriole Corporation, a private company, began operations on January 1, 2020. During its first three years of operations, Oriole reported net income and declared dividends as follows: 2020 2021 2022 Net income $54,000 136,000 160,000 Dividends declared $0 50,000 50,000 The following information is for 2023: Income before income tax Correction of prior period error: understatement of 2021 depreciation expense (before tax) Cumulative increase in prior years' income from change in inventory method (before tax) Dividends declared (of this amount, $25,000 will be paid on January 15, 2024) Effective tax rate $360,000 39,000 49,000 100,000 40% Prepare a 2023 statement of retained earnings for Oriole. The company follows ASPE. (List items that increase retained earnings first after adjusted balance. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).)