Hey, I am having some trouble with my homework on accruals, deferrals and taxes and was wondering if someone might be able to help me out. I have taken a crack at some of the questions but I just want to make sure that I am on the right track because homework assignments count for a lot of our grade.

CASELET: COMFY HOME GOODS STORES For Chapter 4 (Book); Module 4 (HBX)

Comfy Home is a retail business selling a broad range of homeware, kitchen, and electrical appliances to consumers and small businesses. In addition to the home and kitchen appliances, Comfy Home makes and sells home decorating items including artisanal candles and holiday arrangements. The company has two stores located in the small city of Warmtown, USA. Its downtown store offers decorating services to the banks and small businesses in the vicinity. Tenisa Singh handles the candle making and decorating side of the business while Randolf Singh manages the stores. The business is wholly owned by Tenisa and Randolf Singh and was started by the couple in 2014.

Q1a (15 points): Tenisa purchased too many decorations for the holiday season and not all of them were sold. She doesn't know if she will be able to sell them the following year at the same price because consumer tastes change over time, but she plans to store them in the back room and put them out again for sale next year in the holiday season. The good news is that she is sure she can sell the decorations for a price greater than the original purchase price (i.e. book value). Should Comfy Home's accountant record a transaction for the excess decorations? Has their value been impaired? Which accounting concepts are relevant here?

Q1b (15 points): It is a year later and, as Tenisa hoped, the decorations sold well during the holiday season for a price greater than the book value. Tenisa also sold other decorations added to inventory at a later date. During the month of December 2017, $5,000 worth of holiday wreaths were sold, each for $50. On December 1, 2017, there were forty wreaths in inventory purchased at $15 a piece on November 8, 2016. There were also eighty-five wreaths in inventory purchased at $20 a piece on November 2, 2017. If Tenisa and Randolf use the LIFO method for recording their inventory, please calculate the value of holiday wreaths added to the cost of goods sold account during the month of December 2017.

Q2. (30 points) Randolf is firmly convinced that Comfy Homes should do its part to reduce global warming. As such, he purchased and installed a suite of solar panels on the roof of the Comfy Home store they own. His decision was reinforced by an announcement by the federal government of a tax deduction that would allow Comfy Home to deduct from its taxable income half (50%) of the cost of the solar panels straight-line over a period of five years. Comfy Home can only begin taking the deduction in the year following the purchase and installation of the solar panels. Comfy Home's tax rate is 20%. Randolf purchased and installed the solar panels for $40,000 in 2017.

Q2a. In 2017, the tax deduction related to the solar panels would lead to the creation of:

a) A deferred tax liability

b) A tax expense

c) A deferred tax asset

Q2b. In 2018, the tax deduction related to the solar panels would lead to:

a) A credit of $800

b) A debit of $800

c) A credit of $4,000

Q2c. ...to the following account:

a) Deferred tax liability

b) Deferred tax asset

c) Prepaid taxes

Q3. (20 points) Comfy Home's best-selling candle was one that Randolf and Tenisa developed two years earlier after having purchased a patent for a special candle making process. Thanks to the patent, they were able to drop tiny pine cone bits into the wax mixture in addition to adding other elements to the special recipe. It resulted in a marvelously smelling candle. At the end of 2017, a large manufacturer of candles showcased a new candle for the holiday season that was very like Randolf and Tenisa's own candle, likely using a different, and superior, process. The couple was convinced that the competitor's new candle would cut into future revenues from the sale of the candles covered by their own patent. They were faced with two questions:

a. Presently the patent was being amortized over 10 years. How would Comfy Home most likely account for the sudden decrease in value of the patent? Explain.

b. During the holiday season of 2017, the patented candle sales were much lower than expected. The book value of the product remaining in inventory on January 31, 2018 was $25,000. Comfy Home determines it could sell the excess inventory to a bargain basement warehouse, but would have to take a loss of $8,000, as the candles would be sold for below their book value. What would be the journal entry to record the $8,000 loss?

Q4. (20 Points) It's September 26, 2018 and the end of the 3rd quarter. Tenisa and a colleague have successfully brought in a new client for the decorating business. The first order from the new client is placed on that day (September 26) for a party that takes place October 2-4 (a 3-day event). The client pays a deposit of $500 on the date of the order, and the remaining balance is due within 15 days after the event is complete.

a. What is the journal entry that should be recorded on September 26th?

b. Tenisa is an enthusiastic salesperson. She pays herself and her staff healthy bonuses on a quarterly basis for each new client brought in. The company policy is that the bonus will be earned at the end of the first month during which revenue was earned from the new client. The bonus will be paid at the end of the quarter. For this new client, Tenisa and her colleague will each receive a $100 bonus. What is(are) the journal entry(ies) that should be recorded to reflect this bonus (be sure to include the date)?