On December 31, 2013, the Income Statement Section of the Worksheet

question 70

Essay

On December 31, 2013, the Income Statement section of the worksheet is shown below. The balance of Ally Logan's drawing account is $16,000. Record the necessary closing entries on page 9 of a general journal. $$\begin{array} { | l | r | r | } \hline { \text { INCOME STATEMENT COLUMNS } } \\\hline \text { ACCOUNT NAME } & \text { DEBIT } & \text { CREDIT } \\\hline \text { Income Summary } & 47,000 & 53,000 \\\hline \text { Sales } & & 170,000 \\\hline \text { Sales Returns and Allowances } & 4,500 & \\\hline \text { Interest Income } & & 600 \\\hline \text { Purchases } & 71,000 & \\\hline \text { Freight In } & 2,300 & \\\hline \text { Purchases Returns and Allowances } & & 1,300 \\\hline \text { Purchases Discounts } & & 1,900 \\\hline \text { Sales Salaries Expense } & 37,000 & \\\hline \text { Office Salaries Expense } & 18,500 & \\\hline \text { Office Supplies Expense } & 700 & \\\hline \text { Utilities Expense } & 3,500 & \\\hline \text { Payroll Taxes Expense } & 1,100 & \\\hline \text { Uncollectible Accounts Expense } & 1,200 & \\\hline \text { Depr. Expense - Office Equipment } & 600 & \\\hline \text { Totals } & 187,400 & 226,800 \\\hline \text { Net Income } & \underline { 39,400 } & \\\hline & \underline { 226,800 } & \underline { \underline { 226,800 } } \\\hline\end{array}$$

Calculate the tax base of assets and liabilities for the purpose of recognizing deferred taxes.

Understand the concept of temporary differences in accounting.

Identify and record deferred tax liabilities and assets.

Understand the effect of changes in income tax rates on deferred taxes.

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Definitions:

Clarify

To make a statement or situation less confused and more comprehensible.

Obligations

Duties or commitments imposed by law, contract, or a sense of moral responsibility.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to standardize laws across the states.

Identified

Recognized or distinguished as being a particular entity or belonging to a specific category or group.