Air should adjust the beginning balance of retained earnings

Assignment Help Financial Accounting

Reference no: EM131219300

On January 2, 20X1, Air, Inc. agreed to pay its former president $300,000 under a deferred compensation arrangement. Air should have recorded this expense in 20X0 but did not do so. Air's reported income tax expense would have been $70,000 lower in 20X0 had it properly accrued this deferred compensation. In its December 31, 20X1, financial statements, Air should adjust the beginning balance of its retained earnings by a

$230,000 debit

$300,000 credit

$230,000 credit

$370,000 debit

Reference no: EM131219300

Questions Cloud

Journal entry to record the sale of the equipment : A piece of equipment with an original cost of $30,000 and a book value of $10,000 is sold for $11,000 cash. the journal entry to record the sale of the equipment would include a:

Good basis for predicting manufacturing overhead : Mark Adams had always been suspicious of “new-fangled mathematical stuff,” and the most recent suggestion of his new assistant merely con?rmed his belief that schools are putting a lot of useless junk in students’ heads. Is it likely that the number ..

The full cost of jobs plus selling and administrative costs : Gavin Pestrosino, a building contractor, builds houses in tracts, often building as many as 20 homes simultaneously, Petrosino has budgeted costs for an expected number of houses in 20X0 as follows: The job construction overhead includes approximatel..

Common budgets used by manufacturing organizations : What are the most common budgets used by manufacturing organizations? What are the most common budgets used by service organizations? Provide some examples of how these types of budgets might be used in your personal life.

Air should adjust the beginning balance of retained earnings : On January 2, 20X1, Air, Inc. agreed to pay its former president $300,000 under a deferred compensation arrangement. Air should have recorded this expense in 20X0 but did not do so. Air's reported income tax expense would have been $70,000 lower in 2..

New automated inventory retrieval system to reduce costs : A company is considering the purchase of a new automated inventory retrieval system to reduce costs. The new inventory retrieval system will cost $560,000. How much must be saved each year to recover this investment is seven years at an interest rate..

What amounts were payable on each class of stock : At December 31, 20X1 and 20X2, Carr Corp. had outstanding 4,000 shares of $100 par value 6% cumulative preferred stock and 20,000 shares of $10 par value common stock. At December 31, 20X1, dividends in arrears on the preferred stock were $12,000. Ca..

What would be the equivalent value today : A company is considering the purchase of a new bus for transporting students between its north and south campuses. A similar bus was purchased 2 years ago at a cost of $95,000. At an interest rate of 3% per year, what would be the equivalent value to..

Calculate the amount of inventory loss from the flood : On April 8, 2013, a flood destroyed the warehouse of Stuco Distributing Co. From the waterlogged records of the company, management was able to determine that the firm's gross profit ratio had averaged 40% for the past several years and that the inve..

User Account

All Pages