Calculation of Depreciation and the use of Journal Entries
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9. Listed below is information for the Higher Corporation:
2006 2007
Pretax Accounting Income $160,000 $220,000
Pretax Taxable Income 180,000 200,000
Assume that Higher's tax liability is based on a flat 40% rate.
Required:
a. Prepare the journal entry to record Higher's income tax expense for 2006.
b. Prepare the journal entry to record Higher's income tax expense for 2007.
10. McNally Company recently acquired a building from Perry Company in exchange for 5,000 shares of its capital stock and $15,000. Information relating to the sale is detailed below:
Perry's net book value of building $62,000
Professional appraisal value of building 64,000
Market value of McNally Company Stock $9.00/share
Required:
Record the purchase of the building on the books of the McNally Company.
11. Yin Company recently purchased land and a building for $210,000. The building was appraised at $120,000 and the land was appraised at $60,000.
Required:
Show Yin's balance sheet presentation of the land and building.
12. A machine costing $48,000 had an estimated useful life of 5 years and a salvage value of $3,000 when purchased on January 3, Year 1.
Required: Supply the missing information in the table below:
Depreciation Accumulated Book
Expense for Depreciation Value
Method Year 2 on 12/31/Yr 2 on 12/31/Yr 2
Straight-Line ____________ ____________ ____________
Double Declining
Balance ____________ ____________ ____________
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Solution Summary
This posting contains a formatted MS Excel file which illustrates how to perform journal entries for various transactions, including: depreciation, tax expense, and fixed asset purchase.
Solution Preview
Please find attached a formatted MS Excel spreadsheet containing the text below as well as helpful notes, which will help in gaining an understanding of the subject matter.
9 Listed below is information for the Higher Corporation:
2006 2007
Pretax Accounting Income $160,000 $220,000
Pretax Taxable Income 180,000 200,000
Assume that Higher's tax liability is based on a flat 40% rate.
Required:
a. Prepare the journal entry to record Higher's income tax expense for 2006.
Income tax expense 72,000
Income taxes payable 72,000
(To record income tax expenses for 2006)
b. ...
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