Information from the Income Statement columns of Lincoln Corporation’s worksheet on December 31, 2019, is shown below.
1. What is the amount of net income before income tax?
2. What is the amount of income tax on the net income? Use the tax rates given above.
3. What adjustment is recorded for Income Tax Expense? The corporation paid $22,000 through quarterly deposits.
4. What is the amount of net income after income tax?
Homework Answers
Answer:
1. What is the amount of net income before income tax?
$111,600
Sales
$965,000
Less : Expenses
Purchases
$654,000
Selling
Exp.
$148,500
General
Admin.
$98,500
Amortization
$900 - $901,900
Merchandise Inventory Adjustment
(235,500 -
187,000) +$48,500
Profit before
tax
$111,600
2. What is the amount of income tax on the net income.
$43,524
$111,600 x 39% = $43,524
3. What adjustment is recorded for Income Tax Expense? The
corporation paid
$22,000 through quarterly deposits.
Assuming Corporation debited Income Tax Payable and
Credited Cash for quarterly deposit, the required adjustment entry
would be :
Income Tax Expense $43,524
Deferred Tax Assets[($22,000 x
4)-$43,524] $44,476
Income Tax Payable $88,000
4. What is the amount of net income after income tax?
$68,076
$111,600 - $43,524 = $68,076
Add Answer to:
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Cash
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Administrative expenses
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Selling expenses
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Net sales
496,800
Cost of goods sold
193,200
Cash dividends declared (2020)
18,400
Cash dividends paid (2020)
13,800
Discontinued operations (loss before income taxes)
36,800
Depreciation expense, not recorded in 2019
27,600
Retained earnings, December 31, 2019
82,800
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Prepare a partial income statement beginning with income from
continuing operations before income tax, and including...
part a: Prepare the closing entries at December 31. (Credit account tittles are automatically indented when...
part a: Prepare the closing
entries at December 31. (Credit account tittles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31
(To close revenue account.)
31
(To close expense accounts.)
31
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31
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Accumulated depreciation—equipment
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Advertising expense
50,000
Common shares
254,000
Cost of goods sold
1,085,000
Depreciation expense
131,000
Dividends declared
154,000
Equipment
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24,000
Income tax expense
73,000
Insurance expense
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Interest expense
60,000
Interest revenue
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Inventory
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purchased on December 1, 2019, and debited to the Supplies
account).
Expired insurance, $7,600; on December 1, 2019, the firm paid
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Depreciation expense for equipment, $5,200.
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Accumulated depreciation—equipment
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Advertising expense
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Common shares
254,000
Cost of goods sold
1,085,000
Depreciation expense
131,000
Dividends declared
154,000
Equipment
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Freight out
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Income tax expense
73,000
Insurance expense
23,000
Interest expense
60,000
Interest revenue
31,000
Inventory
103,000
Prepaid expenses
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Rent revenue
24,000
Retained earnings
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Cash dividends paid (2020)
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part a: Prepare the closing
entries at December 31. (Credit account tittles are
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manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.)
Date
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31
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Accumulated depreciation—equipment
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Advertising expense
50,000
Common shares
254,000
Cost of goods sold
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Depreciation expense
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Dividends declared
154,000
Equipment
1,461,000
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Income tax expense
73,000
Insurance expense
23,000
Interest expense
60,000
Interest revenue
31,000
Inventory
103,000
Prepaid expenses
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Rent revenue
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Expired insurance, $7,600; on December 1, 2019, the firm paid
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general ledger are presented below for the year ended December 31,
2018:
Accounts receivable
$249,000
Accumulated depreciation—equipment
745,000
Advertising expense
50,000
Common shares
254,000
Cost of goods sold
1,085,000
Depreciation expense
131,000
Dividends declared
154,000
Equipment
1,461,000
Freight out
24,000
Income tax expense
73,000
Insurance expense
23,000
Interest expense
60,000
Interest revenue
31,000
Inventory
103,000
Prepaid expenses
31,000
Rent revenue
24,000
Retained earnings
506,000
Salaries expense
772,000
Sales
2,646,000
Sales discounts
22,000
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