Problem #1 (20 points) Assume the following for Sam Corporation: 2018 Taxable Income (Loss) $ 20,000 Tax rate 30% Tax paid 6,000 2019 $ 30,000 40% 12,000 2020 (current year) ($ 55,000) 40% 0 Prepare the 12/31/20 Tax adjusting entry assuming Sam elects to A. Carry loss back and then forward B. Carry loss forward Problem #2 (20 points) The following information pertains to Sheila Companies Income Statements: 2018 2019 2020 Revenue $200,000 $100,000 $150,000 Salary Expense 75,000 50,000 50,000 Depreciation Expense 10,000 10,000 10,000 Depreciation on Sheila's tax return is as follows: 2018 2019 2020 $15,000 8,000 7,000 Assume a tax rate of 30% in all years Calculate Sheila's Taxable income, Income Before Tax and prepare the year end income tax adjusting entry for 2018, 2019 and 2020. Problem #3 (45 points) Sunset Company, as lessee, enters into a lease agreement on January 1, 2020, to lease equipment. The following data are relevant to the lease agreement. The term of the noncancellable lease is four years, with no renewal option. Payments of $18,500 are due on January 1, of each year. The fair value of the equipment on January 1, 2020 is $75,000. The equipment has an estimated economic life of five years, and an unguarenteed residual value of $3,000. The equipment reverts back to the lessor at the termination of the lease and is expected to have use to the lessor. The lessee is aware that the lessor used an implicit rate of 3%. (Present Value & Future Value Tables are provided on pages 3 and 4) Instructions: 1. Indicate the type of lease Sunset has entered into and why (include a list of the Capital Lease Criteria) (Present Value & Future Value Tables are provided on pages 3 and 4) 2. Prepare the journal entries on Sunset's books related to the lease agreement for the following dates: (round all amounts to the nearest dollar. Include a partial amortization schedule) a. January 1, 2020 b. December 31, 2020 c. January 1, 2021 Problem #4 (15 points) Jewel Company, as lessee, enters into a lease agreement on January 1, 2020, to lease equipment. The following data are relevant to the lease agreement. The term of the noncancellable lease is three years, with no renewal option. The fair value of the equipment on January 1, 2020 is $34,500. The estimated residual value is $0. The equipment reverts back to the lessor at the termination of the lease. The lessor used an implicit rate of 5%. Instructions: -Calculate the required amount of the lease payments (Present Value & Future Value Tables are provided on pages 3 and 4) Present Value of an Ordinary Annuity of 1 PVF-OAn,i=1-1(1+1)ui (n) Periods 2% 2% 3% 4% 5% 6% 1 .9803997561 .97087 96154.95238 .94340 2 1.94156 1.92742 1.91347 1.88609 1.85941 1.83339 3 2.88388 2.85602 2.82861 2.77509 2.72325 2.67301 4 3.80773 3.76197 3.71710 3.62990 3.54595 3.46511 5 4.71346 4.64583 4.57971 4.45182 4.32948 4.21236 6 7 8 5.60143 5.50813 5.41719 5.24214 5.07569 4.91732 6.47199 6.34939 6.23028 6.00205 5.78637 5.58238 7.32548 7.17014 7.01969 6.73274 6.46321 6.20979 8.16224 7.97087 7.78611 7.43533 7.10782 6.80169 8.98259 8.75206 8.53020 8.11090 7.72173 7.36009 9 10 Present Value of an Annuity Due of 1 PVF-ADn,i=1+1-1(1+i) (n) Periods 2% 2% 3% 4% 5% 6% 1 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2 1.98039 1.97561 1.97087 1.96154 1.95238 1.94340 3 2.94156 2.92742 2.91347 2.88609 2.85941 2.83339 4 3.88388 3.85602 3.82861 3.77509 3.72325 3.67301 5 4.80773 4.76197 4.71710 4.62990 4.54595 4.46511 6 7 8 9 10 5.71346 5.64583 5.57971 5.45182 5.32948 5.21236 6.60143 6.50813 6.41719 6.24214 6.07569 5.91732 7.47199 7.34939 7.23028 7.00205 6.78637 6.58238 8.32548 8.17014 8.01969 7.73274 7.46321 7.20979 9.16224 8.97087 8.78611 8.43533 8.10782 7.80169