Essay
On March 2, 2010, Knight Company's CFO, Bob Martin, will receive a bonus equal to 6% of net income before income taxes as reported for the year ended December 31, 2009. The current 2009 income statement shows net income before income taxes as $600,000.
Required:
(1) What journal entry should be made on December 31, 2009?
(2) What journal entry should be made on March 2, 2010?
(3) If Bob decides to postpone $50,000 of 2009 research and development expenditures until 2010, what impact would this have on his bonus? Explain and show your calculations.
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