Reference no: EM133136107

Question - PART 1 - Tamarisk Inc. has recorded all necessary adjusting entries, except for income tax expense, at its fiscal year end, July 31, 2021. The following information has been taken from the adjusted trial balance:

Accounts payable	$25,500	Interest expense	$4,500
Cash dividends-common	62,000	Notes payable	108,000
Common shares	200,000	Retained earnings (Aug. 1, 2020)	303,200
Cost of goods sold	313,500	Salaries expense	126,000
Dividends payable	14,800	Sales	682,000
Income tax expense	27,500	Supplies expense	11,500
Income tax payable	2,900	Unearned revenue	11,600

All accounts have normal balances and total assets equal $803,000. Tamarisk has a 20% income tax rate.

Prepare a multiple-step income statement.

Prepare required journal entry to adjust income tax expense.

PART 2 - Sheridan Ltd. has a September 30 fiscal year end and a 15% income tax rate. The following information is available for its 2021 year end:

1. Earned $490,000 of service revenue and incurred $406,500 of operating expenses. Interest expense was $3,900.

2. On October 5, 2020, paid $50,000 of dividends that had been declared on September 25, 2020.

3. On September 28, 2021, declared $40,000 of dividends payable on October 8, 2021.

4. Retained earnings on September 30, 2020, were $250,000.

5. Issued common shares for $23,500 cash on July 2, 2021.

Prepare an income statement.

Journalize the adjustment for income tax assuming no income tax instalments were made during the year.

Prepare a statement of retained earnings.