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1 question 4 part thank you Sutton Corporation switches from revenue recognition at a point in time to recognitions over a period of time in
1 question 4 part thank you
Sutton Corporation switches from revenue recognition at a point in time to recognitions over a period of time in accordance with the new accounting standars for revenue recognition. Previously Motown recognized revenue at a point in time for tax purposes and will continue to do so. The following data is available: Old method for book: at a point in time Old method for tax: at a point in time New method for book: over a period of time Method for tax: unchanged; at a point in time Beginning Retained Earnings 1/1/24 $ 850,120 # Common shares outstanding 32,000 Tax Rate 18% Difference in Income Diff Tax Income in income Effect Effect Diff in Inc. net of tax expense tax (B) (A)-(B) (A) Pretax Income using Over a period At a point of time in time Year Prior to 20x4 $ 450,000 $ 225,000 In 20X4 $ 68,000 $ 43,000 Total at beginning of 20x5 $ 518,000 $ 268,000 $ 225,000 $ $ 25,000 $ $ 250,000 $ 40,500 $ 184,500 4,500 $ 20,500 45,000 $ 205,000 Total in 20x5 S 198,000 $ 156,000 $ 42,000 $ 7,560 $ 34,440 1.) Calculate net income after tax in 20X4 BEFORE the change in principle. 2.) Calculate END OF YEAR retained earnings in 20X4 BEFORE the change in principle. 3.) Calculate income after tax in 20X5 BEFORE the change in principle. 4.) Calculate END OF YEAR retained earnings in 20X5 BEFORE the change in principleStep by Step Solution
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