Question :
61.The following information was taken from the annual report of : 1253498
61.The following information was taken from the annual report of Jones Inc.
2010
2009
BALANCE SHEET
Deferred income tax liability
$29,700
$28,300
INCOME STATEMENT
Income before taxes
$88,000
Income tax expense
(30,400)
Net income
$57,600
Effective income tax rate 40%
What is Jones’s conservatism ratio?
a. 1.02
b. 1.52
c. 2.89
d. 1.21
62.The following information was taken from the annual report of Jones Inc.
2010
2009
BALANCE SHEET
Deferred income tax liability
$29,700
$28,300
INCOME STATEMENT
Income before taxes
$88,000
Income tax expense
(30,400)
Net income
$57,600
Effective income tax rate 40%
Based on this information, what journal entry shouldJones make in 2010 to record its income taxes?
a.Income Tax Expense.. 30,400
Deferred Income Tax … 29,700
Deferred Income Tax … 28,300
Income Tax Payable … 31,800
b.Income Tax Expense.. 30,400
Deferred Income Tax … 29,700
Income Tax Payable … 700
c.Income Tax Expense.. 31,800
Deferred Income Tax … 1,400
Income Tax Payable … 30,400
d.Income Tax Expense.. 30,400
Deferred Income Tax … 1,400
Income Tax Payable … 29,000
63.The following information was taken from the annual report of Leno Inc.
2010
2009
BALANCE SHEET
Deferred income tax liability
$58,300
$59,400
INCOME STATEMENT
Income before taxes
$108,000
Income tax expense
(40,400)
Net income
$67,600
Effective income tax rate 35%
What is Leno’s conservatism ratio?
a. 0.63
b. 0.91
c. 0.69
d. 0.86
64.The following information was taken from the annual report of Leno Inc.
2010
2009
BALANCE SHEET
Deferred income tax liability
$58,300
$59,400
INCOME STATEMENT
Income before taxes
$108,000
Income tax expense
(40,400)
Net income
$67,600
Effective income tax rate 35%
Based on this information, what journal entry shouldLeno make in 2010 to record its income taxes?
a. Income Tax Expense. 40,400
Deferred Income Tax … 58,300
Deferred Income Tax … 59,400
Income Tax Payable … 39,300
b. Income Tax Expense. 40,400
Deferred Income Tax … 19,000
Income Tax Payable … 59,400
c. Income Tax Expense. 40,400
Deferred Income Tax … 1,100
Income Tax Payable … 41,500
d. Income Tax Expense. 40,400
Deferred Income Tax … 17,900
Income Tax Payable … 58,300
65.Julia Used Cars offers a one-year warranty from the date of sale on all cars it sells. From historic data, Bill Julia estimates that, on average, each car will require the company to incur warranty cost of $820. The cars sold for an average of $9,500 each. The following activities occurred during 2010.
Feb
4
Sold five cars.
Mar
23
Sold ten cars.
May
20
Incurred warranty costs of $6,000 on four cars sold in 2008.
July
6
Sold eight cars.
Sep
1
Incurred warranty costs of $5,000 on five cars sold in 2008.
Nov
14
Incurred warranty costs of $4,000 on one car sold in 2008.
Dec
22
Sold twelve cars.
If Julia accrued its warranty liability with a single adjusting entry at year-end, the journal entry would include:
a. a debit to Contingent Warranty Liability for $28,700
b.a debit to Warranty Expense for $28,700
c. a credit to Parts for $17,220
d. a credit to Cash for $28,700
66.Julia Used Cars offers a one-year warranty from the date of sale on all cars it sells. From historic data, Bill Julia estimates that, on average, each car will require the company to incur warranty cost of $820. The following activities occurred during 2010.
Feb
4
Sold five cars.
Mar
23
Sold ten cars.
May
20
Incurred warranty costs of $6,000 on four cars sold in 2009.
July
6
Sold eight cars.
Sep
1
Incurred warranty costs of $5,000 on five cars sold in 2009.
Nov
14
Incurred warranty costs of $4,000 on one car sold in 2009.
Dec
22
Sold twelve cars.
If the January 1, 2010 beginning balance in the warranty liability account was $2,500, what would be the year-end warranty liability balance?
a. $31,200
b. $16,200
c. $11,200
d. $13,700
67.Julia Used Cars offers a one-year warranty from the date of sale on all cars it sells. From historic data, Bill Julia estimates that, on average, each car will require the company to incur warranty cost of $820. The cars sold for an average of $9,500 each. The following activities occurred during 2010.
Feb
4
Sold five cars.
Mar
23
Sold ten cars.
May
20
Incurred warranty costs of $3,000 on four cars sold in 2009.
July
6
Sold eight cars.
Sep
1
Incurred warranty costs of $5,000 on five cars sold in 2009.
Nov
14
Incurred warranty costs of $6,000 on one car sold in 2009.
Dec
22
Sold twelve cars.
Assume that the breakdown of warranty costs is 40% parts and 60% wages (paid in cash). Based on this information, which of the following journal entries would be made on September 1?
a.Warranty Expense5,000
Contingent Warranty Liability5,000
b. Warranty Expense5,000
Cash3,000
Parts2,000
c. Cash3,000
Parts2,000
Contingent Warranty Liability5,000
d. Contingent Warranty Liability 5,000
Cash3,000
Parts2,000
