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should be adjusted through the deferred tax liability account. a . Fleming Home Products introduced a new line of commercial awnings in 2 0 2
should be adjusted through the deferred tax liability account.
a Fleming Home Products introduced a new line of commercial awnings in that carry a oneyear warranty against manufacturer's defects. Based on industry experience, warranty costs were expected to approximate of sales. Sales of the awnings in were $ Accordingly, warranty expense and a warranty liability of $ were recorded in In late the company's claims experience was evaluated, and it was determined that claims were far fewer than expected: of sales rather than Sales of the awnings in were $ and warranty expenditures in totaled $
b On December Rival Industries acquired its office building at a cost of $ It was depreciated on a straightline basis assuming a useful life of years and no salvage value. However, plans were finalized in to relocate the company headquarters at the end of The vacated office building will have a salvage value at that time of $
c HobbsBarto Merchandising, Incorporated, changed inventory cost methods to LIFO from FIFO at the end of for both financial statement and income tax purposes. Under FIFO, the inventory at January is $
d At the beginning of the Hoffman Group purchased office equipment at a cost of $ Its useful life was estimated to be years with no salvage value. The equipment was depreciated by the sumoftheyears'digits method. On January the company changed to the straightline method.
e In November the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in Huggins had not reached a settlement with state authorities. but legal counsel advised Huggins that it was probable the company would have to pay $ in penalties. Accordingly, the following entry was recorded:
tableAccount Name,Debit,CredittableLosslitigationLiabilitylitigation
Late in a settlement was reached with state authorities to pay a total of $ in penalties.
f At the beginning of Jantzen Specialties, which uses the sumoftheyears'digits method, changed to the straightline method for newly acquired buildings and equipment. The change increased current year net earnings by $
Required:
For each situation:
Identify the type of change.
Prepare any journal entry necessary as a direct result of the change, as well as any adjusting entry for related to the situation described
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