Take home assignment for Intermediate Accounting Ch 16.<\/p>
<\/p>
Gallo Light began operations in 2011. In addition to its other business, the company sometime sells customized equipments on an installment basis. In those cases, Gallo Light reports income in its income statement in the year of the sale. In its income tax return, though, Gallo Light reports installment income by the installment method. Installment sales revenue in 2011 was $150,000, which Gallo Light expects to collect equally over the next three years. Gallo Light also provided one-year warranty on these customized equipments. The expected warrant expense is estimated to be 2% of the sales revenue. A $60,000 loss contingency was accrued in 2011, to be paid in 2013. The tax rate is 35%, but based on an enacted law, the tax rate is scheduled to become 30% in 2013. Gallo Light's pretax accounting income from the 2011 income statement was $800,000, which includes $40,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above.<\/p>
Required: (1) Prepare the appropriate journal entry to record Gallo Light's 2011 income taxes. Show calculations and T-accounts.<\/p>
(2) What is Gallo Light's 2011 net income?<\/p>
(3) How should the deferred tax amounts be classified in a classified balance sheet?<\/p>", "transcribed_text": "", "related_book": { "title": "Data Analysis And Decision Making", "isbn": "538476125, 978-0538476126", "edition": "4th Edition", "authors": "Christian Albright, Wayne Winston, Christopher Zappe", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/415.jpg", "uri": "\/textbooks\/data-analysis-and-decision-making-4th-edition-415", "see_more_uri": "" }, "free_related_book": { "isbn": "1018919317", "uri": "\/textbooks\/the-panama-canal-tolls-controversy-or-a-statement-of-the-reasons-for-the-adoption-and-maintenance-1st-edition-978-1018919317-294595", "name": "The Panama Canal Tolls Controversy Or A Statement Of The Reasons For The Adoption And Maintenance", "edition": "1st Edition" }, "question_posted": "2024-06-28 08:14:55", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/discuss-the-following-statement-even-in-advanced-technology-systems-the", "description": "Discuss the following statement: even in advanced technology systems, the AP clerk must perform a three-way match to approve all vendor invoices for payment.", "stars": 3 }, { "url": "\/study-help\/psychology\/1-make-sure-you-can-see-over-partitions-1984085", "description": "1. Make sure you can see over partitions.", "stars": 3 }, { "url": "\/on-june-15-palmyra-company-sold-merchandise-for-5200-on", "description": "On June 15, Palmyra Company sold merchandise for $5,200 on terms of n\/30 to Lim Company. On June 20, Lim Company returned some of the merchandise for a credit of $1,200, and on June 25, Lim paid the...", "stars": 3 }, { "url": "\/study-help\/questions\/an-exchange-dealer-has-10-million-to-invest-for-3-9878408", "description": "An Exchange dealer has $10 million to invest for 3 months. Given the following information, Covered Interest Arbitrage (CIA) Spot Exchange rate: SFr 1.301\/$ 3 month forward rate: SFr 1.292\/$ 3 month...", "stars": 3 }, { "url": "\/study-help\/questions\/explain-the-difference-between-aer-and-apr-10117825", "description": "explain the difference between AER and APR", "stars": 3 }, { "url": "\/study-help\/questions\/elliott-is-quite-the-golfer-and-one-day-while-playing-1008486", "description": "Elliott is quite the golfer and one day while playing a round of golf with some friends, he whacks his tee-shot into someone's back yard and hits the homeowner on the head with his golf ball. The...", "stars": 3 }, { "url": "\/study-help\/questions\/book-an-intro-to-combustion-4th-ed-by-turns-and-1025757", "description": "Book: An Intro to Combustion 4th ed. by Turns and Haworth Rank these fuels in decreasing order of reactivity: H2, CH4, CO. For a given equivalence ratio, plot (qualitatively) the product gas...", "stars": 3 }, { "url": "\/study-help\/questions\/a-based-on-your-understanding-what-is-product-decision-3-1008301", "description": "a) Based on your understanding, what is product decision? (3 marks) (CLO1:PLO1:C2) b) Draw & explain about the 'Product Life Cycle' (12 marks) (CLO2:PLO1:C2)", "stars": 3 }, { "url": "\/study-help\/questions\/q1-the-following-monthly-budgeted-data-are-available-for-the-1009023", "description": "Q1 The following monthly budgeted data are available for the Stark Company: Sales Variable expenses Contribution margin Product A Product B Product C $500,000 $300,000 $900,000 300,000 210,000...", "stars": 3 }, { "url": "\/study-help\/questions\/air-at-80-and-145-psia-flows-into-a-hair-1025816", "description": "Air at 80 and 14.5 psia flows into a hair dryer and is heated by an electrical heating element. Hot air at 176 leaves the dryer through a 2 inch diameter outlet at a volume flow rate of 1.51 ft3\/s...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/regarding-a-hospital-discuss-how-the-overhead-costs-when-applied-4270981", "next": "\/study-help\/questions\/would-a-traditional-income-statement-differ-depending-on-whether-the-4270983" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "Take home assignment for Intermediate Accounting Ch 16. Gallo Light began operations", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/take-home-assignment-for-intermediate-accounting-ch-16-gallo-light-4270982" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } }} }