Prepare all required financial statements for Cooke Company using your completed trial balance. Prepare a tax provision using the following information:
• The bookkeeper never included deferred income taxes in the financial statements.
• You believe that as a result of pending legislation, the current 30% income tax rate will be increased for 2015 and years forward to 35% and you are uncertain which tax rate to apply in determining deferred taxes.
• The allowance for doubtful accounts is an estimate and the actual bad debt expense incurred for the year was only $75.
• Included on the trial balance is $350 of meals and entertainment expense.
• The equipment has a 5-year MACRS life for tax purposes. The third year MACRS rate is 19.2%.
• The building has a 31.5 year life for MACRS and is depreciated straight line for tax purposes.
• The trial balance includes $500 of premiums paid for officers’ life insurance.
• You determine that there is a need for a 50% valuation allowance
Prepare the tax provision and the correcting entries for income taxes.
Post the tax adjusting entries to your worksheet.
Prepare IN GOOD FORM the following financial statements
- Balance Sheet,
- Income Statement with earnings per share
- Statement of Retained Earnings
Be sure to include all required information in the statements.
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