Question

In: Accounting

For its first year if operations, Altitude Inc. reports pretax GAAP income of $100,000 in 2020....

For its first year if operations, Altitude Inc. reports pretax GAAP income of $100,000 in 2020. Assume pretax income in 2021 and 2022 of $125,000 and $90,000 respectively. The enacted income tax rate in all years is 25%. The following additional information is available for the first three years of operation (with the exception of the one item in the 4th year).

  • Prepaid rent in the amount of $20,000 was recorded on December 21, 2020 for 2021 rent.
  • A warranty accrual of 30,000 was recorded on December 31, 2020. The warranty was paid evenly over the years 2021-2023.
  • The company recorded interest revenue of $500 each of the three years on municipal bonds.
  1. Compute the income tax payable each year for 202, 2021, 2022
  2. Determined the balance of any deferred tax assets or deferred tax liabilities at the end of each year (2020, 2021, 2022)
  3. Record the journal entry related to taxes in 2020, 2021, 20222

Solutions

Expert Solution

ekkarill92 answered 1 month ago
Next > < Previous

Related Solutions

For its first year if operations, Altitude Inc. reports pretax GAAP income of $100,000 in 2020....
For its first year if operations, Altitude Inc. reports pretax GAAP income of $100,000 in 2020. Assume pretax income in 2021 and 2022 of $125,000 and $90,000 respectively. The enacted income tax rate in all years is 25%. The following additional information is available for the first three years of operation (with the exception of the one item in the 4th year). Prepaid rent in the amount of $20,000 was recorded on December 21, 2020 for 2021 rent. A warranty...
For its first year of operations, Altitude Inc. reports pretax GAAp income of 100,000 in 2020....
For its first year of operations, Altitude Inc. reports pretax GAAp income of 100,000 in 2020. Assume pretax GAAP income in 2021 and 2022 of 125,000 and 90,000, respectively. The enacted income tax rate in all years is 25%. The following additional information is available for the first three years of operation (with the exception of the one item in the 4th year): Prepaid rent in the amount of 20,000 was recored on December 31, 2020 for 2021 rent. A...
Zdon Inc. reports an accounting income of $105,000 for 2020, its first year of operations. The...
Zdon Inc. reports an accounting income of $105,000 for 2020, its first year of operations. The following items cause taxable income to be different than income reported on the financial statements.1- Capital cost allowance (on the tax return) is greater than depreciation on the income statement by $16,000. 2- Rent revenue reported on the tax return in $24,000 higher than rent revenue reported on the income statement. 3- non-deductible fines appear as an expense of $15,000 on the income statement....
Flint Inc. reports accounting income of $106,200 for 2020, its first year of operations. The following...
Flint Inc. reports accounting income of $106,200 for 2020, its first year of operations. The following items cause taxable income to be different than income reported on the financial statements. 1. Capital cost allowance (on the tax return) is greater than depreciation on the income statement by $16,800. 2. Rent revenue reported on the tax return is $30,400 higher than rent revenue reported on the income statement. 3. Non-deductible fines appear as an expense of $24,900 on the income statement....
Martinez Corporation prepared the following reconciliation for its first year of operations: Pretax financial income for...
Martinez Corporation prepared the following reconciliation for its first year of operations: Pretax financial income for 2020 $ 1,800,000 Tax exempt interest (150,000) Originating temporary difference 350,000 The temporary difference will reverse evenly over the next two years. The enacted tax rate for 2020 and future years is 20%. The amount reported as net deferred income taxes on Martinez's balance sheet at December 31, 2020, should be a Deferred Tax  of $   . Provide whether the balance sheet account is a Deferred...
In 2016, its first year of operations, Banks Corp. reported pretax income of $200,000 and paid...
In 2016, its first year of operations, Banks Corp. reported pretax income of $200,000 and paid $60,000 of taxes. In 2017, Banks Corp. reported pretax income of $150,000 and paid $45,000 of taxes. In 2018, Banks incurred a $400,000 net operating loss. For all years the tax rate is 30% and there were no differences between taxable income and pretax financial statement income. Also, assume the current tax law (under the TCJA of 2017 that does not allow loss carrybacks)....
Razorback Financial Corp., in its first year of operations in 2018, reported pretax financial income of...
Razorback Financial Corp., in its first year of operations in 2018, reported pretax financial income of $100,000. An investigation of that income revealed the following items:Fines from FDIC for improper practices of $20,000.Installment sales of $30,000 are recognized in financial income. These sales are accounted for by the installment sales method for income tax purposes. Only $10,000 was reported on the tax return.Warranty expenses of $15,000 were accrued for financial reporting purposes, but are not expected to result in a...
     In the first year of operations in 2017, the pretax accounting income of Lisle Company...
     In the first year of operations in 2017, the pretax accounting income of Lisle Company was$16,000. Included in pretax accounting income were the following:      (2) $33,000 of sales revenue that will not be recognized for tax purposes until it is collected; (3) $32,000 in warranty expense that was recognized as product sales were made according to GAAP, but will be deductible for tax purposes only when the actual disbursements are made; and. (1) $4,000 expense for a premium...
Bridgeport Corporation ended its first fiscal year on December 31, 2020, reporting a pretax income for...
Bridgeport Corporation ended its first fiscal year on December 31, 2020, reporting a pretax income for accounting purposes of $2,538,000. All of Bridgeport’ products were sold with a two-year warranty included. Bridgeport recorded $626,000 of warranty expense for accounting purposes in 2020, including $376,000 of actual warranty costs incurred during the year plus $250,000 in estimated warranty liability for the remainder of the warranty period. Estimated liabilities are not deductible for tax purposes. Bridgeport was subject to a 25% income...
Cullumber Ltd. ended its first fiscal year on December 31, 2020, reporting a pretax income for...
Cullumber Ltd. ended its first fiscal year on December 31, 2020, reporting a pretax income for accounting purposes of $1,320,000. All of Cullumber’s products were sold with a two-year warranty included. Cullumber recorded $268,000 of warranty expense for accounting purposes in 2020, including $158,000 of actual warranty costs incurred during the year plus $110,000 in estimated warranty liability for the remainder of the warranty period. Estimated liabilities are not deductable for tax purposes. Cullumber was subject to a 33% income...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT