Acme United Corporation Case Summary

University of Chicago Booth School of Business Accounting and Financial Analysis I (B30016) Case 1: Acme United Corporation Selected Computations Prof. L. Soffer The journal entry summarizing the 2008 activity in the first table in the tax footnote is: Income tax provision $2,209,030 Deferred income tax asset/liability - net $224,277 Cash or income taxes payable $2,433,307

The journal entries summarizing the pretax effect of the charge to AOCI for the pension plan and the related tax effect are: Accumulated other comprehensive income (loss) $1,013,760 Pension asset/liability $1,013,760 Deferred income tax asset/liability – net $373,575 Accumulated other comprehensive income (loss) $373,575 The journal entry summarizing the transaction provided
Reconciliation of state taxes in tax provision summary to state tax effect in tax rate reconciliation:
State taxes (from provision summary) Current Deferred Total state provision Federal savings generated (34%) Calculated net effect on tax provision Rounding, etc. State tax effect on provision in rate reconciliation 216,320 (12,911) 203,409 (69,159) 134,250 809 135,059

Pro forma financial statements reflecting accelerated depreciation and no valuation
depr. under accel. Additional deferred tax assets, net due to elimination of valuation allowance

133,177 0.34 391,697

203,727 0.34 599,197

2,034,623

1,759,114

Sales Costs and expenses Operating income Non-operating items Income before income taxes Income tax expense Net income Effective tax rate

Reported 68,719,012 (61,840,218) 6,878,794 (202,693) 6,676,101 (2,209,030) 4,467,071 0.331

2008 Adjusts. (207,500)

Pro Forma 68,719,012 (62,047,718) 6,671,294 (202,693) 6,468,601 (2,413,989) 4,054,612 0.373

70,550 (275,509)

Computation of pro forma 2009 net