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You have been engaged to review the financial statements of Water Sync Inc. In the course of your investigation you find a number of irregularities during the current year.1. Insurance for a 6-month period purchased on October 1 of this year was charged to prepaid insurance in the amount of $5,000.2. Year-end estimate of bonuses totaled $61,000 and was not recorded because the payment would not be made until next year.3. Warranty expense averages 5% on current year sales of $5,000,000. Warranty expense is automatically debited for 5% of each sale. During the current year, the company also paid $225,000 in warranty related claims. The bookkeeper thought that the payments were an expense and debited warranty expense.4. Office rent is paid quarterly in advance. The first quarter rent for next year ($25,000) was paid in December and rent expense was debited.InstructionsPrepare the necessary correcting entries, assuming that Water Sync Inc. uses a calendar-year basis.
Why do you think present value is an important concept for management to understand? Do you think it should be used for all financial statements items, why or why not?
Assess two major reasons that the Corporate Federal income tax has not been reformed to date, and elaborate on how likely it is to happen in the future. Provide support for your rationale.
Misty's effective tax rate is 40% and there were 1,000 shares of common stock outstanding.
Returns and allowances amounted to $2,000. It purchased equipment normally selling for $10,000 at a 20% discount. Based on these facts, what is its gross income for the year?
Calculate the number of sweatshirts Henry's Hoodies must sell to break even. Round your answer to the nearest whole number.
Victor called you and was in a panic as he had just received a letter from the IRS, requesting an audit of his business. The letter specifically asked for support for the $ 150,000 truck operating expense. Victor had no receipts.
The partners share equally in partnership capital, income, gain, loss, deduction, and credit and capital is not a material income-producing factor.
Discuss a production process that you think would involve the production of joint products, being sure to address the following points:
Kim owns 100% of the stock of Cardinal Corporation. In the current year Kim transfers an installment obligation, tax basis of $30,000 and fair market value of $200,000, for additional stock in Cardinal worth $200,000.
John is attorney earns a fee $500,000 plus the recovery of expenses paid up front in the amount of $30,000. He is thinking about buying the building that he currently lease his office space in. His current lease is $5,000 per month. How to minimiz..
You bought a stock three months ago for $73.82 per share. The stock paid no dividends. The current share price is $76.09.
In May of 2009, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2009, the environmental attorney for Raymond indicated that an unfavorable outcome to the dispute was probable.
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