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Comprehensive Instructions Chart of Accounts General Journal Labels and Amount Descriptions Income Statement Retained Earnings Balance Sheet Instructions At the beginning of 2016, Norris Company

Comprehensive

Instructions

Chart of Accounts

General Journal

Labels and Amount Descriptions

Income Statement

Retained Earnings

Balance Sheet

Instructions

At the beginning of 2016, Norris Company had a deferred tax liability of $6,300, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2015 and 2016, but in 2015 Congress enacted a 38% tax rate for 2017 and future years.

Norriss accounting records show the following pretax items of financial income for 2016: income from continuing operations, $122,300 (revenues of $353,300 and expenses of $231,000); gain on disposal of Division F, $23,000; loss from operations of discontinued Division F, $10,200; and prior period adjustment, $15,200, due to an error that understated revenue in 2015. All of these items are taxable; however, financial depreciation for 2016 on assets related to continuing operations exceeds tax depreciation by $4,000. Norris had a retained earnings balance of $160,900 on January 1, 2016, and declared and paid cash dividends of $33,600 during 2016.

Required:

1. Prepare Norriss income tax journal entry at the end of 2016.
2. Prepare Norriss 2016 income statement.
3. Prepare Norriss 2016 statement of retained earnings.
4. Show the related income tax disclosures on Norriss December 31, 2016, balance sheet.

General Journal

Prepare Norriss income tax journal entry on December 31, 2016.

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GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

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Labels and Amount Descriptions

Labels
Current Assets
Current Liabilities
Noncurrent Liabilities
Noncurrent Assets
Results from discontinued operations
Amount Descriptions
Adjusted retained earnings, January 1, 2016
Cash dividends
Deferred income taxes
Expenses
Income from continuing operations
Net income
Prior period adjustment
Pretax income from continuing operations
Retained earnings, December 31, 2016
Revenues
Retained earnings, January 1, 2016

Income Statement

Prepare Norriss 2016 income statement. Additional Instructions

NORRIS COMPANY

Income Statement

For Year Ended December 31, 2016

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Retained Earnings

Prepare Norriss 2016 statement of retained earnings. Additional Instructions

NORRIS COMPANY

Statement of Retained Earnings

For Year Ended December 31, 2016

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Balance Sheet

Show the related income tax disclosures on Norriss December 31, 2016, balance sheet. Additional Instructions

NORRIS COMPANY

Partial Balance Sheet

December 31, 2016

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