Rita’s Roses: Cash vs. Accrual Basis Accounting (2011)

Posted by on Mar 24, 2025 in Taxation and Public Administration | 0 comments

Rita’s Roses: Net Income Calculation for 2011

In the course of your examination of the books and records of Rita’s Roses for the year ending December 31, 2011, you find the following data:

  • Cash paid for new equipment on 1/1/2011: $150,000
  • Total Sales (cash and credit) for 2011: $750,000
  • Accounts Receivable, 1/1/2011: $193,300
  • Accounts Receivable, 12/31/2011: $154,100
  • Salaries earned by employees: $60,000
  • Salaries owed to employees, 1/1/2011: $4,500
  • Salaries owed to employees, 12/31/2011: $6,700
  • Other expenses
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Accounting for Bad Debts, Credit Sales, and Assets

Posted by on Feb 26, 2025 in Taxation and Public Administration | 0 comments

Chapter 7: Bad Debts Expense

1. Direct Write-Off Method

When using the direct write-off method, the journal entry is as follows:

  • Debit: Bad Debt Expense
  • Credit: Accounts Receivable (A/R) – Customer

Example:

  • A/R: $2,000,000
  • Allowance for Bad Debt: < ($50,000) >
  • Net A/R: $1,950,000

Allowance Accounts (3 Methods)

There are three primary methods for estimating bad debts using allowance accounts:

  1. Percentage of Credit Sales (Income Statement approach)
  2. Percentage of Total Sales (Income Statement approach)
  3. Percentage
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International Taxation: Concepts, Terms, and Principles

Posted by on Feb 20, 2025 in Taxation and Public Administration | 0 comments

International Taxation Concepts

This document covers key concepts in international taxation.

WWI: World Wide Income

World Wide Income (WWI) refers to the situation where a person or company is legally required to pay income tax in a country. It applies when a company has a subsidiary in another country, and both entities must pay income tax. The sum of both incomes constitutes WWI.

CIT: Corporate Income Tax

Corporate Income Tax (CIT) is the tax imposed on companies.

Types of Tax Residence (Domestic Law)

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Understanding the Accounting Cycle and its Steps

Posted by on Jan 14, 2025 in Taxation and Public Administration | 0 comments

The Accounting Cycle

The accounting cycle is a series of activities that begins with a transaction and ends with the closing of the books at the end of the fiscal year. Because this process is repeated each reporting period, it is referred to as the accounting cycle and includes these major steps:

The Accounting Process

  1. Identify the transaction or other recognizable event.
  2. The transactions should have a source document such as a purchase order or invoice.
  3. Analyze and classify the transaction. This step
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