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Acct 557 Midterm Essay

3954 words - 16 pages

1. ​
(TCO B) Define temporary differences, future taxable amounts, and future 
deductible amounts.​
 (Points : 10) 

Temporary Differences are the differences between the book income and taxable 
income. Revenue and/or expensed Items are recognized in one period for taxes 
and another for the books.  
Future Taxable amounts are amounts that increases taxable income for future 
years and creates a deferred tax liability recording.  
Future deductible amounts decreases taxable income in future years creates a 
recording of deferred tax asset. 
2. ​
...view middle of the document...

 Any amortization of unrecognized net loss is recognized on a 
straight­line basis over the average remaining service­life of the employees. 
(5) The contribution made to the pension fund in 2011 was $231,000. 
(a) Determine the pension expense to be reported on the income statement for 
2011. (Round all computations to nearest dollar.) 


(b) Prepare the journal entry (entries) to record pension expense for 2011.​
: 35) 
a) Service Cost =                                                           240,000 
+Interest on PBO (10% * 300,000)=                               30,000 
­ Expected Return on Plan Assets (9% * 280,000)=          (25,200) 
+Amortization of prior service cost (140,000/1000)*200=  28,000 
+Amortization loss (30,000­90,000)/(1000/200)=             12,000 
b) Dr. Pension Expense....... 284,800 
Cr. OCI (G/L)........ 12,000 
Cr. OCI­PSC ......... 28,000 
Cr. Pension Asset / Liability .......... 13,800 
Cr. Cash................ 231,000 

3. ​
(TCO A)  Chicago contractors got  $5,400,000 contract to construct a school 

building for the City of Chicago. Work on this contract began in 2013 and the 
financial data pertaining to this contract is available here. 
Cost incurred till Dec.31, 2013                      $1,080,000 
Billings made to City                                      $1,000,000 
Amount collected from City                            $  750,000 
The estimated future cost to complete this contract is $3,240,000.  
(a) Prepare Chicago contractors 2013 journal entries using percentage of 
completion method. 
% completed = 1,080,000 / (1,080,000 + 3,240,000) = 25% 
 Dr. Construction IP...... 1,080,000 
Cr. Accounts Payable ....... 1,080,000 
Dr. Accounts Receivables .......... 1,000,000 
Cr. Billing on Construction IP ........ 1,000,000 
Dr. Cash .......... 750,000 
Cr. Accounts Receivables ....... 750,000 
Dr. Construction IP ........... 270,000 
Dr. Construction Expense ..... 1,080,000 
Cr. Revenue from Long­term Contract......... 1,350,000 


(b) Show how the contract accounts will appear in the Balance Sheet of Chicago 
Contractors on 12/31/2013.​
 (Points : 35) 
Construction In Process
Dr. 1,080,000
Dr. 270,000 
Total: 1,350,000

Cr. 1,000,000 
Total: 1,000,000 


4. ​

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