1. Develop a completed balance sheet and completed statement of deferred taxes and Valuation Equity report....

    

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1. Develop a completed balance sheet and completed statement of deferred taxes and Valuation Equity report. Reference line items above on the B/S, Deferred Tax, and Valuation Equity reports using the item letters (a few examples are completed for you). (70 points) I've included a blank template in the Homework 1 folder along with the assignment. Note that some calculations/subtotals are already built in to the template (see bolded note on previous page), but you should double- check each of them to ensure their accuracy. 2. Briefly explain why Deferred Taxes are included on the B/S. What would the implications of ignoring deferred taxes be for the B/S? (15 points) 3. Briefly explain/define Valuation Equity and its potential sources. (15 points) 4. Extra Credit: For each unused line item above, provide a brief description of why it was NOT used on the 12/31/21 Balance Statement (0.5 points each) View 125% Zoom + Add Page t. W. Other: n. e. h. Cash on hand and in checking account 113,000 b. Market value of all equipment 175,000 C. 2020 Income taxes paid in 2021 Cash operating expenses paid in 2021 Principal portion of 15-year loan due in 2022 f. 15,000 Principal paid on 15-year loan during 2021 14,000 g. Inventories: Supplies 9,000 Insurance premiums for 2022 paid in Dec. 2021 Investment in local brewery made in 2016 for $50,000, 20,500 estimated market value of $70,000 as of 12/31/21 ??? Change in accounts payable during 2021 1,500 k. Inventories: Completed goods 27,000 Principal balance on operating (short-term) loan 16,000 m. Accrued interest on 15-year note 9,000 1,000 5,000 Rent for January 2022, paid in Dec. 2021 p. Accumulated depreciation on equipment Accrued income, social security, and payroll taxes 21,000 110,000 r. 2022 liquor license fees, paid in Dec. 2021 4,000 Original cost of all equipment owned 295,000 Legal/accountancy services used in 2021, bill not yet received Accounts payable Total principal balance on 15-year loan Mutual funds valued at $83,000 as of 12/31/21, book value of $70,000 u. 3,000 39,000 180,000 i. 1. Insert 9. a. d. j. V. Table Accrued interest on operating (short-term) loan O. A Chart Text Shape Media Comment S. 32,000 618,000 ??? X. Capital originally contributed by owner(s) 100,000 Federal tax rate Self-employment tax rate 25% 15.30% State tax rate 5% Note that a few items have already been added for you (a., b., and x.). There are subtotal calculations in some cells that will update as you enter values on the balance sheet or deferred tax worksheets (cells shaded in gray). The deferred tax value, current and non-current are shaded in red on both the balance sheet and the deferred tax worksheet. The valuation equity cells are shaded in blue on both the balance sheet and the valuation equity worksheet. These cells all contain formulas and references that should not be changed; they will update/compute automatically as you complete the assignment. Collaborate CL Format E Document Nothing selected. Select an object or text to format. COOL E20 Home Insert 2 3 4 As of: 5 6 7 8 AutoSave OFF 53 54 55 56 57 58 59 60 61 62 63 64 65 66 A B 9 10 11 12 13 14 15 16 17 18 19 20 TOTAL CURRENT ASSETS 21 22 23 24 67 68 69 70 71 C December 31, 2021 CURRENT ASSETS Cash Savings & short-term deposits Marketable securities (at market) Accounts receivable Inventories: Supplies and other Raw Inputs NONCURRENT ASSETS Draw Prepaid expenses Other current assets - business Other current assets personal 25 26 27 28 29 30 31 32 33 34 35 36 37 TOTAL NONCURRENT ASSETS 38 39 40 41 42 43 44 TOTAL ASSETS 45 46 47 NOTES to accompany Financial Statements: 48 Book values (cost less depreciation) 49 Financial assets 50 Other investments 51 Machinery and equipment 52 Real-estate land ASSETS Intermediate goods Completed Goods Cash investment in work-in-progress Intermediate assets (at market) Machinery & equipment (at market) Business real estate (at market) Land Buildings Real-estate buildings 9 5 C ... Page Layout fx =SUM(E7:E10, E12:E19) Ready Investments in capital leased assets Investments In cooperatives Investments in other business entities Info D Other noncurrent assets -business (at market) Other noncurrent assets-personal (at market) Balance Sheet Formulas Accessibility: Unavailable E 2021 113,000 113,000 a. 175,000 175,000 F 288,000 Data for Illini Tap - HW 1 b. H I J Review K CURRENT LIABILITIES Accounts payable Notes payable within 1 year Current portion of all term debt Accrued interest Accrued expenses LIABILITIES AND OWNER EQUITY Accrued taxes Accrued business expenses Other accrued items Current portion-deferred taxes Other current liabilities - business Other current liabilities - personal View TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES Noncurrent portion of term business debt: Non-real estate debt: Deferred Taxes and VE Noncurrent portion-deferred taxes Other noncurrent liabilities - business Other noncurrent liabilities - personal Notes with original maturity less than 10 years Notes with original maturity greater than 10 years Real estate debt: TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES Notes with original maturity less than 10 years Notes with original maturity greater than 10 years OWNER EQUITY L Contributed capital Retained earnings Valuation equity TOTAL OWNER EQUITY TOTAL LIABILITIES & OWNER EQUITY Automate Short Answer HW1 template.xls - Compatibility Mode Tell me + M 2021 0 100,000 0 288,000 288,000 N X. P a. b. C. d. e. f. g. h. i. j. k. m. n. od x p. S. u. V. W. X. Q Other: Cash on hand and in checking account Market value of all equipment 2020 Income taxes paid in 2021 Cash operating expenses paid in 2021 Principal portion of 15-year loan due in 2022 Principal paid on 15-year loan during 2021 Inventories: Supplies Insurance premiums for 2022 paid in Dec. 2021 Investment in local brewery made in 2016 for $50,000, estimated market value of $70,000 as of 12/31/21 Change in accounts payable during 2021 Inventories: Completed goods R Principal balance on operating (short-term) loan Accrued interest on 15-year note Accrued interest on operating (short-term) loan Rent for January 2022, paid in Dec. 2021 Accumulated depreciation on equipment Accrued income, social security, and payroll taxes 2022 liquor license fees, paid in Dec. 2021 Original cost of all equipment owned Legal/accountancy services used in 2021, bill not yet received Accounts payable Total principal balance on 15-year loan Mutual funds valued at $83,000 as of 12/31/21, book value of $70,000 Capital originally contributed by owner(s) Federal tax rate Self-employment tax rate State tax rate S Notes 113,000 Current Asset 175,000 NonCurrent Asset 32,000 618,000 15,000 14,000 9,000 20,500 ??? 1,500 27,000 16,000 9,000 1,000 5,000 110,000 21,000 4,000 295,000 3,000 39,000 180,000 ??? 100,000 Equity Section, one component of equity 25% 15.30% 5% 8:0 B 1.9 I Comments T Share 68% 131 1 2 3 456780 o Home Insert 9 4 As of: 7 Current Portion Valuation of Specific Current Asset Items 10 Marketable securities 11 Inventories 12 Accounts receivable 13 Cash investment in work in progress 14 Prepaid expenses 15 AutoSave OFF 39 40 41 42 16 1. Excess of Market Value over Tax Basis of Current Assets (Sum) 17 18 Deductions 19 Accounts payable 20 Accrued interest 21 Accrued taxes 22 Other accrued expenses 35 Noncurrent Portion 36 43 44 45 46 A 23 2. Total deductions 24 25 3. Current portion of deferred taxable income [1-2, zero if negative] 26 47 48 49 27 4. Estimated federal and state income tax rate 28 5. Deferred federal and state tax expense [3x4] 29 6. Estimated self-employment tax rate 30 7. Social Security Tax Income Limit 31 8. Deferred self-employment tax [the minimum of 3x6 or 7] 32 9. Total current portion of deferred income taxes [5+8] 33 34 55 56 37 Deferred taxable income from noncurrent assets 38 Real Estate Land 58 59 60 B December 31, 2021 61 62 63 64 65 66 67 68 69 70 71 72 73 9 5 C ... Draw Page Layout fx =0.124*MIN(130,125)+0.029*125 Machinery and equipment Real Estate Buildings Other Noncurrent Assets Ready Info Calculation of Deferred Taxes for Illini Tap - HW 1 10. Noncurrent portion of deferred taxable income [sum, zero if negative] 11. Estimated federal and state income tax rate 12. Total noncurrent portion of deferred taxes [10x11] Valuation Equity: D Real Estate Land Machinery and equipment Real Estate Buildings Other Noncurrent Assets Financial Assets/Marketable Securities Less: Personal Liabilities NonCurrent Deferred Taxes Other Total Valuation Equity Formulas Data Review Balance Sheet Accessibility: Unavailable E Market Value 0 Gain/Loss 0 Market Value $0 Deferred Taxes and VE F G Tax Basis Tax Basis H $ I View Difference 0 0 0 0 30% 0 15.3% 147.000 Gain/Loss 0 0 0 0 0 30% Short Answer J HW1 template.xls - Compatibility Mode Automate K L Tell me M N O P R S T U V W X 8:0 Y B Z 1.9 AA I AB Comments AC AD Share AE 75% AF 1. Develop a completed balance sheet and completed statement of deferred taxes and Valuation Equity report. Reference line items above on the B/S, Deferred Tax, and Valuation Equity reports using the item letters (a few examples are completed for you). (70 points) I've included a blank template in the Homework 1 folder along with the assignment. Note that some calculations/subtotals are already built in to the template (see bolded note on previous page), but you should double- check each of them to ensure their accuracy. 2. Briefly explain why Deferred Taxes are included on the B/S. What would the implications of ignoring deferred taxes be for the B/S? (15 points) 3. Briefly explain/define Valuation Equity and its potential sources. (15 points) 4. Extra Credit: For each unused line item above, provide a brief description of why it was NOT used on the 12/31/21 Balance Statement (0.5 points each) View 125% Zoom + Add Page t. W. Other: n. e. h. Cash on hand and in checking account 113,000 b. Market value of all equipment 175,000 C. 2020 Income taxes paid in 2021 Cash operating expenses paid in 2021 Principal portion of 15-year loan due in 2022 f. 15,000 Principal paid on 15-year loan during 2021 14,000 g. Inventories: Supplies 9,000 Insurance premiums for 2022 paid in Dec. 2021 Investment in local brewery made in 2016 for $50,000, 20,500 estimated market value of $70,000 as of 12/31/21 ??? Change in accounts payable during 2021 1,500 k. Inventories: Completed goods 27,000 Principal balance on operating (short-term) loan 16,000 m. Accrued interest on 15-year note 9,000 1,000 5,000 Rent for January 2022, paid in Dec. 2021 p. Accumulated depreciation on equipment Accrued income, social security, and payroll taxes 21,000 110,000 r. 2022 liquor license fees, paid in Dec. 2021 4,000 Original cost of all equipment owned 295,000 Legal/accountancy services used in 2021, bill not yet received Accounts payable Total principal balance on 15-year loan Mutual funds valued at $83,000 as of 12/31/21, book value of $70,000 u. 3,000 39,000 180,000 i. 1. Insert 9. a. d. j. V. Table Accrued interest on operating (short-term) loan O. A Chart Text Shape Media Comment S. 32,000 618,000 ??? X. Capital originally contributed by owner(s) 100,000 Federal tax rate Self-employment tax rate 25% 15.30% State tax rate 5% Note that a few items have already been added for you (a., b., and x.). There are subtotal calculations in some cells that will update as you enter values on the balance sheet or deferred tax worksheets (cells shaded in gray). The deferred tax value, current and non-current are shaded in red on both the balance sheet and the deferred tax worksheet. The valuation equity cells are shaded in blue on both the balance sheet and the valuation equity worksheet. These cells all contain formulas and references that should not be changed; they will update/compute automatically as you complete the assignment. Collaborate CL Format E Document Nothing selected. Select an object or text to format. COOL E20 Home Insert 2 3 4 As of: 5 6 7 8 AutoSave OFF 53 54 55 56 57 58 59 60 61 62 63 64 65 66 A B 9 10 11 12 13 14 15 16 17 18 19 20 TOTAL CURRENT ASSETS 21 22 23 24 67 68 69 70 71 C December 31, 2021 CURRENT ASSETS Cash Savings & short-term deposits Marketable securities (at market) Accounts receivable Inventories: Supplies and other Raw Inputs NONCURRENT ASSETS Draw Prepaid expenses Other current assets - business Other current assets personal 25 26 27 28 29 30 31 32 33 34 35 36 37 TOTAL NONCURRENT ASSETS 38 39 40 41 42 43 44 TOTAL ASSETS 45 46 47 NOTES to accompany Financial Statements: 48 Book values (cost less depreciation) 49 Financial assets 50 Other investments 51 Machinery and equipment 52 Real-estate land ASSETS Intermediate goods Completed Goods Cash investment in work-in-progress Intermediate assets (at market) Machinery & equipment (at market) Business real estate (at market) Land Buildings Real-estate buildings 9 5 C ... Page Layout fx =SUM(E7:E10, E12:E19) Ready Investments in capital leased assets Investments In cooperatives Investments in other business entities Info D Other noncurrent assets -business (at market) Other noncurrent assets-personal (at market) Balance Sheet Formulas Accessibility: Unavailable E 2021 113,000 113,000 a. 175,000 175,000 F 288,000 Data for Illini Tap - HW 1 b. H I J Review K CURRENT LIABILITIES Accounts payable Notes payable within 1 year Current portion of all term debt Accrued interest Accrued expenses LIABILITIES AND OWNER EQUITY Accrued taxes Accrued business expenses Other accrued items Current portion-deferred taxes Other current liabilities - business Other current liabilities - personal View TOTAL CURRENT LIABILITIES NONCURRENT LIABILITIES Noncurrent portion of term business debt: Non-real estate debt: Deferred Taxes and VE Noncurrent portion-deferred taxes Other noncurrent liabilities - business Other noncurrent liabilities - personal Notes with original maturity less than 10 years Notes with original maturity greater than 10 years Real estate debt: TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES Notes with original maturity less than 10 years Notes with original maturity greater than 10 years OWNER EQUITY L Contributed capital Retained earnings Valuation equity TOTAL OWNER EQUITY TOTAL LIABILITIES & OWNER EQUITY Automate Short Answer HW1 template.xls - Compatibility Mode Tell me + M 2021 0 100,000 0 288,000 288,000 N X. P a. b. C. d. e. f. g. h. i. j. k. m. n. od x p. S. u. V. W. X. Q Other: Cash on hand and in checking account Market value of all equipment 2020 Income taxes paid in 2021 Cash operating expenses paid in 2021 Principal portion of 15-year loan due in 2022 Principal paid on 15-year loan during 2021 Inventories: Supplies Insurance premiums for 2022 paid in Dec. 2021 Investment in local brewery made in 2016 for $50,000, estimated market value of $70,000 as of 12/31/21 Change in accounts payable during 2021 Inventories: Completed goods R Principal balance on operating (short-term) loan Accrued interest on 15-year note Accrued interest on operating (short-term) loan Rent for January 2022, paid in Dec. 2021 Accumulated depreciation on equipment Accrued income, social security, and payroll taxes 2022 liquor license fees, paid in Dec. 2021 Original cost of all equipment owned Legal/accountancy services used in 2021, bill not yet received Accounts payable Total principal balance on 15-year loan Mutual funds valued at $83,000 as of 12/31/21, book value of $70,000 Capital originally contributed by owner(s) Federal tax rate Self-employment tax rate State tax rate S Notes 113,000 Current Asset 175,000 NonCurrent Asset 32,000 618,000 15,000 14,000 9,000 20,500 ??? 1,500 27,000 16,000 9,000 1,000 5,000 110,000 21,000 4,000 295,000 3,000 39,000 180,000 ??? 100,000 Equity Section, one component of equity 25% 15.30% 5% 8:0 B 1.9 I Comments T Share 68% 131 1 2 3 456780 o Home Insert 9 4 As of: 7 Current Portion Valuation of Specific Current Asset Items 10 Marketable securities 11 Inventories 12 Accounts receivable 13 Cash investment in work in progress 14 Prepaid expenses 15 AutoSave OFF 39 40 41 42 16 1. Excess of Market Value over Tax Basis of Current Assets (Sum) 17 18 Deductions 19 Accounts payable 20 Accrued interest 21 Accrued taxes 22 Other accrued expenses 35 Noncurrent Portion 36 43 44 45 46 A 23 2. Total deductions 24 25 3. Current portion of deferred taxable income [1-2, zero if negative] 26 47 48 49 27 4. Estimated federal and state income tax rate 28 5. Deferred federal and state tax expense [3x4] 29 6. Estimated self-employment tax rate 30 7. Social Security Tax Income Limit 31 8. Deferred self-employment tax [the minimum of 3x6 or 7] 32 9. Total current portion of deferred income taxes [5+8] 33 34 55 56 37 Deferred taxable income from noncurrent assets 38 Real Estate Land 58 59 60 B December 31, 2021 61 62 63 64 65 66 67 68 69 70 71 72 73 9 5 C ... Draw Page Layout fx =0.124*MIN(130,125)+0.029*125 Machinery and equipment Real Estate Buildings Other Noncurrent Assets Ready Info Calculation of Deferred Taxes for Illini Tap - HW 1 10. Noncurrent portion of deferred taxable income [sum, zero if negative] 11. Estimated federal and state income tax rate 12. Total noncurrent portion of deferred taxes [10x11] Valuation Equity: D Real Estate Land Machinery and equipment Real Estate Buildings Other Noncurrent Assets Financial Assets/Marketable Securities Less: Personal Liabilities NonCurrent Deferred Taxes Other Total Valuation Equity Formulas Data Review Balance Sheet Accessibility: Unavailable E Market Value 0 Gain/Loss 0 Market Value $0 Deferred Taxes and VE F G Tax Basis Tax Basis H $ I View Difference 0 0 0 0 30% 0 15.3% 147.000 Gain/Loss 0 0 0 0 0 30% Short Answer J HW1 template.xls - Compatibility Mode Automate K L Tell me M N O P R S T U V W X 8:0 Y B Z 1.9 AA I AB Comments AC AD Share AE 75% AF

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