Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 1. in preparing its second quarter interim financi

1. In preparing its second quarter interim financial statements, a calendar year company reported the...

50.1K

Verified Solution

Question

Accounting

1. In preparing its second quarter interim financial statements, a calendar year company reported the following information:

First quarter taxable income $100,000
First quarter income tax expense 6,000
Second quarter taxable income 40,000

As of the second quarter, the company had an estimated effective annual income tax rate of 20%. What amount should the company report as income tax expense in its interim income statement for the second quarter?

A.$2,000

B.$8,000

C.$22,000

D.$28,000

2. A company with a calendar year end uses the LIFO method to value its inventory in the annual and interim financial statements. On January 1, Year 2, the company's inventory balance was reported at $80,000. Market prices decreased in the second quarter, causing a potential realized inventory loss of $15,000. The decline was not expected to reverse by December 31, Year 2. However, the inventory's market price recovered, resulting in inventory valuations of $85,000 in the third quarter and $88,000 in the fourth quarter. At what amount should the company report inventory on its September 30, Year 2 interim balance sheet?

A.$65,000

B.$80,000

C.$85,000

D.$88,000

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students