Global Company’s taxable incomes in two previous years of operation are as follows. Global elects the carryback option.

 

2013

2014

2015

2016

taxable income

$500,000

$600,000

$400,000

$300,000

tax rate

45%

45%

40%

40%

Global reported a pre-tax income as follows in 2017-2020. The enacted tax rate is 40% in 2017 and beyond.

2017

2018

2019

2020

pre-tax income

($100,000)

$300,000

($400,000)

$200,000

tax rate

40%

40%

40%

40%

There were no temporary differences at the beginning of 2017 originated from past years. The following permanent and temporary differences are incurred in 2017-2019. There was no differences newly originating in 2020. Both deferred tax asset and liability had 0 balances at the beginning of 2017.

2017

(a) Depreciation is reported by the straight-line method assuming a four-year useful life for a car acquired in 2017 at a cost of $100,000. On the tax return, deductions for depreciation will be as in the following table:

 

2017

2018

2019

2020

Depreciation expense recognized

$25,000

$25,000

$25,000

$25,000

Depreciation for tax purposes

$30,000

$35,000

$20,000

$10,000

(b)  Paid a total of $30,000, which is all tax deductible in 2017, as a prepaid rent for renting a facility for three years in 2018-2020.

2018

(a)   Included in the 2018 income was $25,000 interest revenue from investments in municipal bonds, which is not taxable and yields a permanent difference.

(b)  Installment sales revenue of $50,000 was recognized which will be taxable when the payments are received. $30,000 will be received in 2019, and the rest will be received in 2020.

2019

 (a) Warranty expense of $65,000 was included in the 2019 pretax income. The warranty expense will be tax deductible when paid in 2020.

 (Enter your answers in DOLLARS.Round your final answers to the nearest dollar amount.)

(1)  For each of temporary difference, determine whether the difference would yield changes in DTL or DTA. Note that the determination is made only once in the year the difference is initially originated. 

(2)  Prepare the tax worksheets for 2017-2020.

Hint: For 2017-2020, the ending balances of DTL and DTA are as follows.

 

2017

2018

2019

2020

DTL

$16,000

$36,000

$18,000

$0

DTA

$0

$0

$52,000

$0

(3)  Prepare the journal entries for 2017-2020.

                                                        Financial Performance Analysis

Activity Context

Revisit the MBA6014 Course Alignment Map to review how all activities assist you in achieving the course competencies and overall program outcomes.

Activity Instructions

This assignment provides you the opportunity to analyze transactions with the use of T-accounts and prepare financial statements. In addition, you will analyze and interpret the information found in the financial statements and communicate those findings in a professional manner.

Complete P3-4 (pages 148–149) and CP3-2 (page 155) from Chapter 3 of your Financial Accounting textbook.

Submission Requirements

All quantitative assignments must be completed on the Microsoft Excel templates provided. Create one workbook with multiple tabs, copying each problem’s template onto a separate tab and completing the work there. Submit this single file in the assignment area. Include your name and the assignment number in the file name; also include your name and the problem number on each tab of the document. All work should be shown. Assignments must not be submitted as a PDF.

Refer to the scoring guide for this assignment to ensure that you meet the grading criteria. Note that one scoring guide is used to evaluate both of the problems in this assessment; each criterion in the scoring guide relates to one or both of the problems here.

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                                                                    Adjusting Entries

Activity Context

Revisit the MBA6014 Course Alignment Map to review how all activities assist you in achieving the course competencies and overall program outcomes.

Activity Instructions

This assignment addresses the impact of adjusting entries on financial statements and will help you to demonstrate your understanding of deferred revenue, deferred expense, accrued revenue, and accrued expense, as well as your understanding of the accounting entries that record these items in the accounting system.

Complete P4-7 (page 209) and CP4-2 (page 217) from Chapter 4 of your Financial Accounting textbook.

Submission Requirements

All quantitative assignments must be completed on the Microsoft Excel templates provided. Create one workbook with multiple tabs, copying each problem’s template onto a separate tab and completing the work there. Submit this single file in the assignment area. Include your name and the assignment number in the file name; also include your name and the problem number on each tab of the document. All work should be shown. Assignments must not be submitted as a PDF.

Refer to the scoring guide for this assignment to ensure that you meet the grading criteria. Note that one scoring guide is used to evaluate both of the problems in this assessment; each criterion in the scoring guide relates to one or both of the problems here.