The records for Bosch Co. show this data for 2011: Gross profit on installment sales recorded on
Question:
The records for Bosch Co. show this data for 2011:
Gross profit on installment sales recorded on the books was $360,000. Gross profit from collections of installment receivables was $270,000.
Life insurance on officers was $3,800.
Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2011.
Interest received on tax exempt Iowa State bonds was $9,000.
The estimated warranty liability related to 2011 sales was $19,600. Repair costs under warranties during 2011 were $13,600. The remainder will be incurred in 2012.
Pretax financial income is $600,000. The tax rate is 30%.
Instructions
a) Prepare a schedule starting with pretax financial income and compute taxable income.
b) Prepare the journal entry to record income taxes for 2011.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Step by Step Answer:
a Computation of the schedule starting with pretax fi...View the full answer
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
