1. January 15 2014 Purchased marketable equity securities for $100,000.

1. December 31, 2014: revalued marketable securities to their market value of $90,000. Unrealized changes in market value of marketable equity securities appear in accumulated other comprehensive income.
2. December 31, 2014: RECOGNIZED INCOME TAX EFFECTS OF THE REVALUATION IN PART B AT AN INCOME TAX RATE OF 40%. The income tax law includes changes in Market value of equity securities in taxable income only when the investor sells the securities.
3. Jan. 5, 2015: sold the marketable equity securities for $94,000.
4. Jan 5, 2015: Recognized the tax effect of the sale of the securities in part assume that the tax is paid in cash immediately.

1. a. During 2015: sold inventory to account for $500,000.

b. During 2015: The cost of goods sold in part a. is is $400,000.

c. During 2015: Estimated that uncollectible accounts on goods sold in part a will equal 2% of selling price.

d. During 2015: Estimated that warranty claims on goods sold in part a will equal 4% of selling price.

e. During 2015: Actual accounts written off as uncollectible totaled $3,000.

f. During 2015: Actual cash expenditures on warranty claims totaled $8,000.

g. Dec. 31,2015: Recognized income tax effects of preceding six transactions.

The income tax rate is 40%. The income tax law permits a deduction for uncollectible accounts when a firm writes off accounts as uncollectable and for warranty claims when a firm makes warranty expenditures. Assume that any tax is paid in cash immediately.

1. a. January 1, 2015: Purchased $100,000 face value of zero-coupon bonds for $68,058.

These bonds mature on Dec. 31, 2019, and are priced on the market at the time of issuance to yield 8% computed annually. Zero-coupon bonds earn interest as time passes for financial and tax reporting, but the issuer does not pay interest until maturity. Assume that any tax owed on taxable income is paid in cash immediately.

b. Dec. 31, 2015: Recognized interest revenue on the bonds for 2015.

c. Dec. 31, 2015: Recognized income tax effect of interest revenue for 2015. The income tax law taxes interest on zero-coupon bonds as it accrues each year.

d. Dec.31, 2016: Recognized interest revenue on the bonds for 2016.

e. Dec. 31, 2016: Recognized income tax effect of interest revenue for 2016.

f. Jan.2, 2017: Sold the zero-coupon bonds for $83,683.

g. Jan.2, 2017: Recognized the income tax effect of the gain or loss on the sale. The applicable income tax rate is 40% which affect cash immediately.