#1 Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. For each item below, indicate whether it involves: (1) A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. (2) A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. (3) A permanent difference. Use the appropriate number to indicate your answer for each. (a) The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets. (b) A landlord collects some rents in advance. Rents received are taxable in the period when they are received. (c) Expenses are incurred in obtaining tax-exempt income. (d) Costs of guarantees and warranties are estimated and accrued for financial reporting purposes. (e) Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. (f) Interest is received on an investment in tax-exempt municipal obligations. (g) For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes. (h) Proceeds are received from a life insurance company because of the death of a key officer. (The company carries a policy on key officers.) (i) The tax return reports a deduction for 80% of the dividends received from U.S. corporations. The cost method is used in accounting for the related investments for financial reporting purposes. (j) Estimated losses on pending lawsuits and claims are accrued for books. These losses are taxdeductible in the period(s) when the related liabilities are settled. (k) Expenses on stock options are accrued for financial reporting purposes. ----------------------------------------------------------------------------------------------------- #2 The pretax financial income (or loss) figures for Synergetics Company are as follows. 2008 $163,400 2009 254,800 2010 87,200 2011 (163,400 ) 2012 (392,300 ) 2013 130,100 2014 113,900 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 45% tax rate for 2008 and 2009 and a 40% tax rate for the remaining years. Prepare the journal entries for the years 2010 to 2014 to record income tax expense and the effects of the net operating loss carrybacks, and carryforwards, assuming Synergetics Company uses the carryback provision. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.) (Credit account titles are automatically indented when amount is entered. Do not inde.

1. #1
Listed below are items that are commonly accounted for
differently for financial reporting purposes than they are for tax
purposes.
For each item below, indicate whether it involves:
(1)
A temporary difference that will result in future deductible
amounts and, therefore, will usually give rise to a deferred
income tax asset.
(2)
A temporary difference that will result in future taxable
amounts and, therefore, will usually give rise to a deferred
income tax liability.
(3)
A permanent difference.
Use the appropriate number to indicate your answer for each.
(a)
The MACRS depreciation system is used for tax purposes, and
the straight-line depreciation method is used for financial
reporting purposes for some plant assets.
(b)
A landlord collects some rents in advance. Rents received are

2. taxable in the period when they are received.
(c)
Expenses are incurred in obtaining tax-exempt income.
(d)
Costs of guarantees and warranties are estimated and accrued
for financial reporting purposes.
(e)
Installment sales of investments are accounted for by the
accrual method for financial reporting purposes and the
installment method for tax purposes.

3. (f)
Interest is received on an investment in tax-exempt municipal
obligations.
(g)
For some assets, straight-line depreciation is used for both
financial reporting purposes and tax purposes, but the assets’
lives are shorter for tax purposes.
(h)
Proceeds are received from a life insurance company because of
the death of a key officer. (The company carries a policy on key
officers.)
(i)
The tax return reports a deduction for 80% of the dividends

4. received from U.S. corporations. The cost method is used in
accounting for the related investments for financial reporting
purposes.
(j)
Estimated losses on pending lawsuits and claims are accrued for
books. These losses are taxdeductible in the period(s) when the
related liabilities are settled.
(k)
Expenses on stock options are accrued for financial reporting
purposes.
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--------------------------
#2
The pretax financial income (or loss) figures for Synergetics
Company are as follows.
2008
$163,400
2009

5. 254,800
2010
87,200
2011
(163,400
)
2012
(392,300
)
2013
130,100
2014
113,900
Pretax financial income (or loss) and taxable income (loss) were
the same for all years involved. Assume a 45% tax rate for 2008
and 2009 and a 40% tax rate for the remaining years.
Prepare the journal entries for the years 2010 to 2014 to record
income tax expense and the effects of the net operating loss
carrybacks, and carryforwards, assuming Synergetics Company
uses the carryback provision. All income and losses relate to
normal operations. (In recording the benefits of a loss
carryforward, assume that no valuation account is deemed
necessary.)
(Credit account titles are automatically indented when amount
is entered. Do not indent manually.)
Account Titles and Explanation

6. Debit
Credit
2010
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
2011
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
2012
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
(To record carryback.)
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
(To record carryforward.)
2013

7. [removed]
[removed]
[removed]
[removed]
[removed]
[removed]
2014
[removed]
[removed]
[removed]
[removed]
[removed]
[removed]
List of Accounts
:
Allowance to Reduce Deferred Tax Asset to Expected
Realizable Value
Benefit Due to Loss Carryback
Benefit Due to Loss Carryforward
Deferred Tax Asset
Deferred Tax Liability
Income Tax Expense
Income Taxes Payable
Income Tax Refund Receivable
---------------------------------------------------------------------------
-----------------
#3
The following information is available for Remmers
Corporation for 2012.
1.
Depreciation reported on the tax return exceeded depreciation
reported on the income statement by $131,600. This difference

8. will reverse in equal amounts of $32,900 over the years 2013–
2016.
2.
Interest received on municipal bonds was $18,700.
3.
Rent collected in advance on January 1, 2012, totaled
$66,900 for a 3-year period. Of this amount, $44,600 was
reported as unearned at December 31, 2012, for book purposes.
4.
The tax rates are 40% for 2012 and 35% for 2013 and
subsequent years.
5.
Income taxes of $324,600 are due per the tax return for 2012.
6.
No deferred taxes existed at the beginning of 2012.
(a) Compute taxable income for 2012.
Taxable income for 2012
$
[removed]
PLEASE NOTE:
PARTS B, C AND D TO THIS PROBLEM ARE PENDING. I
WILL NEED TO DO LIVE CHAT FOR PART B, C, AND D
ONCE
PART A
IS DONE.
List of Accounts:

9. Allowance to Reduce Deferred Tax Asset to Expected
Realizable Value
Benefit Due to Loss Carryback
Benefit Due to Loss Carryforward
Deferred Tax Asset
Deferred Tax Liability
Income Tax Expense
Income Taxes Payable
Income Tax Refund Receivable
---------------------------------------------------------------------------
----------------------------
#4
The following information has been obtained for the Gocker
Corporation.
1.
Prior to 2012, taxable income and pretax financial income were
identical.
2.
Pretax financial income is $1,732,500 in 2012 and
$1,416,900 in 2013.
3.
On January 1, 2012, equipment costing $1,360,000 is purchased.
It is to be depreciated on a straightline basis over 5 years for
tax purposes and over 8 years for financial reporting purposes. (
Hint:

10. Use the half-year convention for tax purposes, as discussed in
Appendix 11A.)
4.
Interest of $61,100 was earned on tax-exempt municipal
obligations in 2013.
5.
Included in 2013 pretax financial income is an extraordinary
gain of $206,300, which is fully taxable.
6.
The tax rate is 39% for all periods.
7.
Taxable income is expected in all future years.
(a) Compute taxable income and income taxes payable for
2013.
Taxable income
$
[removed]
Income taxes payable
$
[removed]
PLEASE NOTE:
PARTS B, C AND D. TO THIS PROBLEM ARE PENDING. I
WILL NEED TO DO LIVE CHAT FOR PART B, C, AND D
ONCE
PART A
IS DONE.

11. List of Accounts
:
Allowance to Reduce Deferred Tax Asset to Expected
Realizable Value
Benefit Due to Loss Carryback
Benefit Due to Loss Carryforward
Deferred Tax Asset
Deferred Tax Liability
Income Tax Expense
Income Taxes Payable
Income Tax Refund Receivable