Assume Company starts operations on 1/1/2013 with an equity investment of $744,250. The company's next 7 years of financial performance are listed below. Assume that the company has no permanent or temporary differences for the first three fiscal years. During Fiscal Year 2016 the company experiences a net operating loss. The marginal corporate tax rates for each year are located on the income statement.

1. Calculate taxable income (IRS), taxes payable (IRS), and tax expense (USGAAP)

2. How should the company account for the Net Operating Loss?

3. Provide ALL journal entries AND t-accounts.

4. Create a complete set of financial statements (I/S, SRE, B/S, SCF) for the firm for the years 2013 through 2019.

 

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INCOME STATEMENT 1/1/13 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 Cash Sales 744,250 $ 744,250 $ 744,250 $ 114,500 $ 801,500 $ 687,000 $ 715,625 Credit Sales Installment Sales Total Revenues 744,250 $ 744.250 $ 744,250 $ 114,500 S 801,500 $ 687,000 $ 715,625 Operating Expenses Gain/Loss 629,750 $ 629,750 $ 629,750 $ 629,750 $ 629,750 $ 629,750 $ 629,750 Bad Debt Expenses (25% of Credit Sales) Warranty Expenses (0% of Revs) $4 $ Depreciation Expense EBT (Pre-tax Financial Income) 114,500 $ 114,500 $ 114,500 $ (S15,250) $ 171,750 $ 85,875 21.00% 57,250 $ Tax Rates 0.00% 30.00% 40.00% 21.00% 21.00% 21.00% 21.00% 11 INCOME STATEMENT 1/1/13 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 Cash Sales 744,250 $ 744,250 $ 744,250 $ 114,500 $ 801,500 $ 687,000 $ 715,625 Credit Sales Installment Sales Total Revenues 744,250 $ 744.250 $ 744,250 $ 114,500 S 801,500 $ 687,000 $ 715,625 Operating Expenses Gain/Loss 629,750 $ 629,750 $ 629,750 $ 629,750 $ 629,750 $ 629,750 $ 629,750 Bad Debt Expenses (25% of Credit Sales) Warranty Expenses (0% of Revs) $4 $ Depreciation Expense EBT (Pre-tax Financial Income) 114,500 $ 114,500 $ 114,500 $ (S15,250) $ 171,750 $ 85,875 21.00% 57,250 $ Tax Rates 0.00% 30.00% 40.00% 21.00% 21.00% 21.00% 21.00% 11

Answer rating: 100% (QA)

1 123113 123114 123115 123116 123117 123118 123119 Taxable income 114500 114500 114500 515250 171750 57250 85875 tax payable 108203 tax expense 34350 45800 24045 36068 12023 18034 2 Net operating loss ... View the full answer