Question

Winter Gear, Inc. started business on January 1, 20X1. The company uses the income statement approach...

Winter Gear, Inc. started business on January 1, 20X1. The company uses the income statement approach to estimating bad debts. The company incorrectly used the actual write-off of the receivable for the recorded bad debt expense in the below income statement.

Credit sales $678,000
Bad debt expense as a percentage of sales 2%
Write-off of accounts receivable $1,000
Tax rate 30%
Estimated tax payment $31,000

Incorrect income statement, for the year ended December 31:

Sales $678,000
Expenses 549,200
Bad debt expense 1,000
Pretax income 127,800
Tax expense 38,340
Net income 89,460

What is the ending balance of deferred tax asset-allowance (DTA-allowance) for 20X1?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Winter Gear, Inc. started business on January 1, 20X1. The company uses the income statement approach...
Winter Gear, Inc. started business on January 1, 20X1. The company uses the income statement approach to estimating bad debts. The company incorrectly used the actual write-off of the receivable for the recorded bad debt expense in the below income statement. Credit sales $678,000 Bad debt expense as a percentage of sales 2% Write-off of accounts receivable $1,000 Tax rate 30% Estimated tax payment $31,000 Incorrect income statement, for the year ended December 31: Sales $678,000 Expenses 549,200 Bad debt...
Earl Company uses the accrual method of accounting. Here is a reconciliation of Earl's allowance for...
Earl Company uses the accrual method of accounting. Here is a reconciliation of Earl's allowance for bad debts for the current year. Beginning allowance for bad debts 1,100,000 Actual write-offs of accounts receivable during the year (700,000) Addition to allowance 900,000 Ending allowance for bad debts $1,300,000 Which of the following statements is true? Select one: a. Bad debt expense per books is $1,300,000, and the income tax deduction for bad debts is $900,000. b. Bad debt expense per books...
On January 1, 20X1, Mechanical Engineers, Inc. had an accounts receivable balance of $506,000 and a...
On January 1, 20X1, Mechanical Engineers, Inc. had an accounts receivable balance of $506,000 and a credit balance in the allowance for uncollectible accounts of $45,000. During January, the company had credit sales of $2,150,000, collections on credit sales of $1,950,000, and write offs of uncollectible accounts receivable totaling $41,000. All of the company's sales are credit sales. a) Prepare journal entries to record the credit sales, cash collections, and accounts receivable write offs for January. b) Mechanical Engineers, Inc....
A method of estimating bad debts that focuses on the balance sheet rather than the income...
A method of estimating bad debts that focuses on the balance sheet rather than the income statement is the allowance method based on a. direct write-off b. aging the trade receivable accounts c. credit sales d. specific accounts determined to be uncollectible
Accounts Receivable Problem Type I - PERCENTAGE OF SALES (OR INCOME STATEMENT APPROACH) For 2015, The...
Accounts Receivable Problem Type I - PERCENTAGE OF SALES (OR INCOME STATEMENT APPROACH) For 2015, The company reported the following: ?A/R beginning of Year = $ 20,000 ?Allowance at Beginning of year = $18,800?(Credit balance) ?Credit Sales = $ 91,250 ?Write-offs = $21,000 ?Cash collections = 80,000 ?Total expense = 70,000 1. The company estimates that be 12% of annual sales will be uncollected each year. What is the Bad Debt Expense for 2015 ? 2. What is the ending...
B Inc., reports bad debt expense using the allowance method. For tax purposes the direct write-off...
B Inc., reports bad debt expense using the allowance method. For tax purposes the direct write-off method is used. At the end of the current year, B has accounts receivable and an allowance for uncollectible accounts of $5,000,000 and $200,000, respectively, and taxable income of $20,000,000. At the end of the previous year, B reported a deferred tax asset of $80,000 related to the difference in reporting bad debts, its only temporary difference. The enacted tax rate is 30% each...
3. Bell Inc. reports bad debt expense using the allowance method. For tax purposes the direct...
3. Bell Inc. reports bad debt expense using the allowance method. For tax purposes the direct write-off method is used. At the end of the current year, Bell has accounts receivable and an allowance for uncollectible accounts of $10,000,000 and $500,000, respectively, and taxable income of $50,000,000. At the beginning of the current year, Bell reported a deferred tax asset of $210,000 related to the difference in reporting bad debts, its only temporary difference. The enacted tax rate is 40%...
D & A Company uses the aging of accounts receivable approach to estimate bad debt expense....
D & A Company uses the aging of accounts receivable approach to estimate bad debt expense. On December 31, 2019, an analysis of accounts receivable revealed the following: Schedule of accounts receivable by age Accounts receivable, Dec 31 Age of Accounts receivable Estimated percentage of uncollectible $130,000 Not yet due 0.75% 45,000 1-30 days past due 4% 9,000 31-60 days past due 10% 4,000 61-90 days past due 60% 2,000 Over 90 days past due 90% Required: a) Calculate the...
Problem 7 B Inc., reports bad debt expense using the allowance method. For tax purposes the...
Problem 7 B Inc., reports bad debt expense using the allowance method. For tax purposes the direct write-off method is used. At the end of the current year, B has accounts receivable and an allowance for uncollectible accounts of $5,000,000 and $200,000, respectively, and taxable income of $20,000,000. At the end of the previous year, B reported a deferred tax asset of $80,000 related to the difference in reporting bad debts, its only temporary difference. The enacted tax rate is...
1. Which of the following is considered cash?             a.   120-day Treasury bill             b.   Money...
1. Which of the following is considered cash?             a.   120-day Treasury bill             b.   Money market checking accounts             c.   short term investments             d.   Receivables 2. Deposits held as compensating balances a.   are usually some percentage of the committed amount. b.   if legally restricted and held against short-term credit may be included as cash. c.   if legally restricted and held against long-term credit may be included among current assets. d.   none of these. 3. Cash that is restricted...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT