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Problems 1.		Zheng Inc. began operations in January 2015. For certain of its property sales, Zheng recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Zheng recognizes income when it collects cash from the buyer's installment payments. In 2015, Zheng had $600 million in sales of this type. Scheduled collections for these sales are as follows: 2015 $60 million 2016 120 million 2017 120 million 2018 150 million 2019 150 million $600 million Assume that Zheng has a 30% income tax rate and that there were no other differences in income for financial statement and tax purposes.
	Ignoring operating expenses, what deferred tax liability would Zheng report in its year-end 2015 balance sheet?

2.

Brady Inc. purchased several investment securities during 2012, its first year of operations. The following information pertains to these securities. The fluctuations in their fair values are not considered permanent. Fair Value Fair Value Amortized Cost Amortized Cost Held to Maturity 12/31/15 12/31/16 12/31/15 12/31/16 Blue Co. Bonds $375,000 $400,000 $367,500 $360,000 Trading Securities Red Co. Stock $48,000 $59,500 $66,000 Green Inc Stock $47,000 $77,000 $39,000 Brown Inc Stock $44,000 $38,500 $32,900 Available for Sale Securities Yellow Co Stock $130,500 $150,400 $140,000 What balance sheet amount would Brady report for its total investment securities at 12/31/2016?

3.

Maryland Quality Homes (MQH) constructed a new subdivision during 2015 and 2016 under contract with Mason-Dixon Co. Relevant data are summarized below: Contract amount $3,000,000 Cost: 2015 1,200,000 2016 600,000 Gross profit: 2015 800,000 2016 400,000 Contract billings: 2015 1,500,000 2016 1,500,000 3a. MQH recognizes revenue over time with respect to these contracts. What would be the journal entry made in 2015 to record revenue (and show computations)?

	3b. MQH recognizes revenue over time with respect to these contracts. For 2016, what is the journal entry to record revenue (and show computations)?
	3c. MQH recognizes revenue upon completion of the contract. For 2015, what is the journal entry to record revenue (and show computations)?

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