Intermediate Exam 2 Practice (from the lecture notes) THIS IS JUST A SAMPLE. DO NOT USE AS YOUR REVIEW 1. Pop Consulting leased machinery from Red Inc on January 1, 2018 The lease was recorded as a finance lease. The present value of the lease payments discounted at 10% was $405.000. Ten annual lease payments of $60.000 are due each Jan 1 beginning Jan 1, 2018 aWhat amount of interest expense trom the lease should Pap report in its December 31, 2018, income statement? s bWhat amount of amortization expense? ea What is the balance in Lease payable on December 317 c What is the balance in the Right of Use Asset as of December 317 d Jounal entries for 2018 for Pop date Cr Account Dr 1/1/18 Joumal entries for 2018 for Redding dater 1/1/15 Cr Account Di LeaseCo Industries leased equipment to UserCorp on Jan 1, 2018. LeaseCo recorded the lease as a sales-type lease at $810,000, the present value of lease payments discounted at 10 %. The lease called for ten annual lease payments of $120,000 due each Dece 31. The first payment was received on Jan 1, 2018. LeaseCo had manufactured the equipment at a cost of $750,000. The total increase in eamings (pretax) on LeaseCo's December 31, 2018, income statement would be 2. Journal entries for 2018 for LeaseCo dater Account Dr Cm 1/1/2018 Karla Salons leased equipment from SmithCo on January 1,2018, in an operating lease. The present 3 value of the lease payments discounted at 10% was $80.000 Ten annual lease payments of $12.000 are due each January 1, beginning January 1, 2018. The amortization of the right of-use asset in 2018 would be Joumal entries for 2018 for Smith Co Account Cr Dr date 1/1/18 There are more problems to practice Chapter 16 1. Windsor Company started 2016 with a defered tax liabity of $125 As of the end of the period Windsor identfies future taxable amounts of $500. Windsor has a tax rate of 30%, and calculates that taxes payable will be $120. What is Windsor's taxable income? Windsor's tax expense joumal entry for 2016 would be 2. Rikat Real Estate has a $200,000 instalment accounts receivable Rickart's tax rate is 25% Rikats balance sheet should include a tax defermed equal to 3 Courts Temporary Services reported pretax accounting income in 2016. 2017, 2018, and 2019 of $150,000. In 2016, an asset was acquired for $200.000 The asset is deprecianed for financial reporting purposes over four years on a straight-ine basis (no residual value) For tax purposes the asser's cost s deducted (by MACRS) over 2016-2019 as folows: $66.000, $88000, $30.000, and $16,000 No other depreciable assets were acquired. The enacted tax rate is 30% for all 4 years Onginates 2016 Reverses 2017 2018 2019 Total Pretax accounting income Joumal entry to record income tax expense for 2016 Same scenario but the tax rate was lowered to 20 % in 2017 eflective for years 2018 and 2019 Reverses 2017 Originates 2016 Taal 2019 2018 Pretax accounting income Jounal entry to record income tax expense for 2017 Joumal entry to record income tax expense for 2018 There are many more scenarios in the chapter 16 notes and practices Intermediate Exam 2 Practice (from the lecture notes) THIS IS JUST A SAMPLE. DO NOT USE AS YOUR REVIEW 1. Pop Consulting leased machinery from Red Inc on January 1, 2018 The lease was recorded as a finance lease. The present value of the lease payments discounted at 10% was $405.000. Ten annual lease payments of $60.000 are due each Jan 1 beginning Jan 1, 2018 aWhat amount of interest expense trom the lease should Pap report in its December 31, 2018, income statement? s bWhat amount of amortization expense? ea What is the balance in Lease payable on December 317 c What is the balance in the Right of Use Asset as of December 317 d Jounal entries for 2018 for Pop date Cr Account Dr 1/1/18 Joumal entries for 2018 for Redding dater 1/1/15 Cr Account Di LeaseCo Industries leased equipment to UserCorp on Jan 1, 2018. LeaseCo recorded the lease as a sales-type lease at $810,000, the present value of lease payments discounted at 10 %. The lease called for ten annual lease payments of $120,000 due each Dece 31. The first payment was received on Jan 1, 2018. LeaseCo had manufactured the equipment at a cost of $750,000. The total increase in eamings (pretax) on LeaseCo's December 31, 2018, income statement would be 2. Journal entries for 2018 for LeaseCo dater Account Dr Cm 1/1/2018 Karla Salons leased equipment from SmithCo on January 1,2018, in an operating lease. The present 3 value of the lease payments discounted at 10% was $80.000 Ten annual lease payments of $12.000 are due each January 1, beginning January 1, 2018. The amortization of the right of-use asset in 2018 would be Joumal entries for 2018 for Smith Co Account Cr Dr date 1/1/18 There are more problems to practice Chapter 16 1. Windsor Company started 2016 with a defered tax liabity of $125 As of the end of the period Windsor identfies future taxable amounts of $500. Windsor has a tax rate of 30%, and calculates that taxes payable will be $120. What is Windsor's taxable income? Windsor's tax expense joumal entry for 2016 would be 2. Rikat Real Estate has a $200,000 instalment accounts receivable Rickart's tax rate is 25% Rikats balance sheet should include a tax defermed equal to 3 Courts Temporary Services reported pretax accounting income in 2016. 2017, 2018, and 2019 of $150,000. In 2016, an asset was acquired for $200.000 The asset is deprecianed for financial reporting purposes over four years on a straight-ine basis (no residual value) For tax purposes the asser's cost s deducted (by MACRS) over 2016-2019 as folows: $66.000, $88000, $30.000, and $16,000 No other depreciable assets were acquired. The enacted tax rate is 30% for all 4 years Onginates 2016 Reverses 2017 2018 2019 Total Pretax accounting income Joumal entry to record income tax expense for 2016 Same scenario but the tax rate was lowered to 20 % in 2017 eflective for years 2018 and 2019 Reverses 2017 Originates 2016 Taal 2019 2018 Pretax accounting income Jounal entry to record income tax expense for 2017 Joumal entry to record income tax expense for 2018 There are many more scenarios in the chapter 16 notes and practices