Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. xercise 7.13(static) accounting for marketable sec

xercise 7.13(Static) Accounting for Marketable Securities (LO7-1, LO7-4) Wharton, Incorporated, pays income...

60.1K

Verified Solution

Question

Accounting

xercise 7.13(Static) Accounting for Marketable Securities (LO7-1, LO7-4)
Wharton, Incorporated, pays income taxes on gains on marketable securities at a rate of 30 percent. At December 31, year 1, the company owns marketable securities that cost $180,000 but have a current market value of $220,000.
Required:
b. As of December 31, year 1, what income taxes has Wharton paid on the increase in value of these investments?
c. Prepare a journal entry at January 4, year 2, to record the cash sale of these investments at $250,000. Ignore the reversing entry for the unrealized gain/loss from year 1.
d. What effect will the sale recorded in part c have on Whartons tax obligation for year 2?

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