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berry0331
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| Posted: 29 Apr 2012 at 20:46 | IP Logged
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Am I the only one who thinks these problems are hard? Any explanation
would be great. Thanks in advance!
Question CPA-00790
On May 1, Year 1, Marno County issued property tax assessments for the
fiscal year ended June 30, Year 2. The first of two equal installments was
due on November 1, Year 1. On September 1, Year 1, Dyur Co. purchased
a 4-year old factory in Marno subject to an allowance for accrued taxes.
Dyur did not record the entire year's property tax obligation, but instead
records tax expenses at the end of each month by adjusting prepaid
property taxes or property taxes payable, as appropriate. The recording of
the November 1, Year 1, payment by Dyur should have been allocated
between an increase in prepaid property taxes and a decrease in property
taxes payable in which of the following percentages?
a. Increase in prepaid property taxes 66 2/3%, Decrease in property taxes
payable 33 1/3%
b. Increase in prepaid property taxes 0%, Decrease in property taxes
payable 100%
c. Increase in prepaid property taxes 50%, Decrease in property taxes
payable 50%
d. Increase in prepaid property taxes 33 1/3%, Decrease in property taxes
payable 66 2/3%
Choice "d" is correct. 33 1/3% increase in prepaid.
Question CPA-00794
Winn Co. sells subscriptions to a specialized directory that is published
semiannually and shipped to subscribers on April 15 and October 15.
Subscriptions received after the March 31 and September 30 cutoff dates
are held for the next publication. Cash from subscribers is received evenly
during the year and is credited to deferred subscription revenue. Data
relating to Year 2 are as follows:
Deferred subscription revenue, 1/1/Year 2 $ 750,000 Cash receipts
from subscribers 3,600,000
In its December 31, Year 2, balance sheet, Winn should report deferred
subscription revenue of:
a. $2,700,000
b. $1,800,000
c. $1,650,000
d. $900,000
Choice "d" is correct. $900,000.
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astone
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Joined: 23 Mar 2011
Location: United States
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Posts: 91
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| Posted: 30 Apr 2012 at 11:47 | IP Logged
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| Question CPA-00790 |
| Tax Period = 07.01.01 - 06.30.02 = 12 Months |
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| Payment on 11.01.01 = 6 month period |
| Months prepaid = 2 months |
| Prepaid % = 2 mos./6 mos. = .33 |
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| Payable on 11.01.01 = 12 months |
| Months remain payable = 8 months |
| Payable % = 8 mos./12 mos. = .67 |
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| Question CPA-00794 |
| Deferred Subscription Revenue = Cash received 10.01-12.31 3 months |
| Total cash receipts = 3,600,000 / 12 = 300,000 per month |
| Month Deferred * Monthly Receipts = 900,000 |
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wool1
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| Posted: 22 Jun 2012 at 11:29 | IP Logged
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you have to pay the full year's (7/1/01-6/30/02) worth of assessments even though you bought the building mid-year (9/1/01)?
also , I dont think Months prepaid = 2 months.
Hereare their entries
9/30/01
tax expense 1 months' worth
....................tax payable 1 month's worth
10/30/01
tax expense 1 months' worth
....................tax payable 1 month's worth
11/1/01
Tax payable 2 months' worth
Prepaid tax 4 months' worth
....................cash 6 months' worth
my answer is a.
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wool1
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| Posted: 22 Jun 2012 at 11:30 | IP Logged
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What in the world does this mean?
"subject to an allowance for accrued taxes."
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musiclover2
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| Posted: 19 Aug 2016 at 14:29 | IP Logged
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So the tax assessment period is for fiscal year ended
June 30, yr 2, then the period covered is:
July August September October November December
*
Payment is made on November 1st, so the prepaid
remaining is only for November and December (2/6= 33
1/3%). July, August, September, and October (4/6= 66
2/3%) would have been expensed and property taxes
payable had been decreased.
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