Allied Corp - Unadjusted Trial Balance as of 12/31/12
| Item |
|
Debit |
|
Credit |
| Cash |
|
4240 |
|
0 |
| Prepaid Expense |
|
640 |
|
0 |
| DTA |
|
224 |
|
0 |
| Machine |
|
1920 |
|
0 |
| Accum Dep - Machine |
|
0 |
|
0 |
| Income Tax Payable |
|
0 |
|
936 |
| DTL |
|
0 |
|
224 |
| Unearned Revenue |
|
0 |
|
320 |
| Note Payable |
|
0 |
|
1200 |
| Common Stock |
|
0 |
|
1040 |
| Additional Paid In-Capital |
|
0 |
|
1120 |
| Sales Revenue |
|
0 |
|
14880 |
| Cost of Goods Sold |
|
8000 |
|
0 |
| Sales and General Expense |
|
2720 |
|
0 |
| Depreciation Expense |
|
0 |
|
0 |
| Officer's Life Insurance Prem |
|
400 |
|
0 |
| Interest on Municipal Bonds |
|
0 |
|
320 |
| Fine paid to the EPA |
|
960 |
|
0 |
| Income Tax Expense - 2012 |
|
936 |
|
0 |
|
|
20,040 |
|
20,040 |
Assumptions:
1. Allied determined on 12/31/2012 that a $400 loss on a lawsuit was probable. Payment of $400 was made early in 2013, as expected.
2. Allied paid for lawn care in advance in November 2012: $640 for the 2013 and 2014 seasons. ($400 for 2013, $240 for 2014)
3. The machine was purchased on 7/15/12. This is the only fixed asset. Depreciation is straight-line over four years.
4. Assume that Current Tax Law allows half of the value of the assets to be depreciated in the first year, with the balance to be depreciated straight line
Assignments:
1. What is the pre-tax income for the year 2012?
2. What is the taxable book income for the year 2012?
3. What is the taxable income for the year 2012?
4. What is the 2012 tax payable?
5. What are the tax accounting journal entries for 2012? (journal entries needed to be made to correct the above balances)
6. Classify the DTA / DTLs created as Current / Non Current for the 12/31/12 Balance Sheet
7. Create a 2012 Income statement
8. What is the 2012 closing journal entry?
9. Create a 12/31/12 balance sheet
10. The accountant left you a lovenote indicating that the DTA on the books is for a 640 NOL carryforward.
Does his calculation seem accurate? Why or why not?