Franton Co

question 90

Essay

Franton Co., a calendar year, accrual basis corporation, reported $2,076,000 net income after tax on its 2012 financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information.
• Federal tax expense per books was $1,069,000.
• Franton received $22,400 of dividends from its investment in Microsoft and General Motors stock.
• Bad debt expense was $12,900, and write-offs of uncollectible accounts receivable totaled $16,300.
• Book depreciation was $110,890, and MACRS depreciation was $94,700.
• Franton paid a $50,000 fine to the City of Albany for illegal trash dumping.
Compute Franton's taxable income and regular tax liability.

Understand the accounting process and journal entry preparation for stock dividends and stock splits.

Calculate and prepare journal entries for cash dividends, stock dividends, and treasury stock transactions.

Comprehend the effects of corporate transactions and events on stockholders' equity, including stock issuance, dividends, and stock splits.

Prepare a retained earnings statement, incorporating various adjustments and transactions.

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Definitions:

Sales Per Square Foot

A metric used to evaluate the efficiency of a retail space, indicating the average revenue generated per square foot of sales area.

Selling Area

The physical or digital space where products or services are displayed and offered to consumers for purchase.

Total Sales

The complete amount of sales revenue generated from goods or services within a specific period, before any deductions.

Wheel Of Retailing

A theory that describes how retail businesses start with low prices and low margins, then upgrade their operations and raise prices as they establish themselves.