Question

In: Accounting

Bramble Company began operations at the beginning of 2021. The following information pertains to this company....

Bramble Company began operations at the beginning of 2021. The following information pertains to this company.

1. Pretax financial income for 2021 is $98,000.
2. The tax rate enacted for 2021 and future years is 20%.
3. Differences between the 2021 income statement and tax return are listed below:
(a) Warranty expense accrued for financial reporting purposes amounts to $6,900. Warranty deductions per the tax return amount to $1,800.
(b) Gross profit on construction contracts using the percentage-of-completion method per books amounts to $86,500. Gross profit on construction contracts for tax purposes amounts to $62,400.
(c) Depreciation of property, plant, and equipment for financial reporting purposes amounts to $57,900. Depreciation of these assets amounts to $81,100 for the tax return.
(d) A $3,200 fine paid for violation of pollution laws was deducted in computing pretax financial income.
(e) Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500.
4. Taxable income is expected for the next few years. (Assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.)

Compute taxable income for 2021.

Compute the deferred taxes at December 31, 2021, that relate to the temporary differences described above.

Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2021.

Draft the income tax expense section of the income statement, beginning with “Income before income taxes.”

Solutions

Expert Solution


Related Solutions

ina Company began operations at the beginning of 2021. The following information pertains to this company....
ina Company began operations at the beginning of 2021. The following information pertains to this company. 1. Pretax financial income for 2021 is $106,000. 2. The tax rate enacted for 2021 and future years is 20%. 3. Differences between the 2021 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $6,500. Warranty deductions per the tax return amount to $1,800. (b) Gross profit on construction contracts using the percentage-of-completion method per...
Pina Company began operations at the beginning of 2021. The following information pertains to this company....
Pina Company began operations at the beginning of 2021. The following information pertains to this company. 1. Pretax financial income for 2021 is $85,000. 2. The tax rate enacted for 2021 and future years is 20%. 3. Differences between the 2021 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,600. Warranty deductions per the tax return amount to $1,900. (b) Gross profit on construction contracts using the percentage-of-completion method per...
Bonita Company began operations at the beginning of 2021. The following information pertains to this company....
Bonita Company began operations at the beginning of 2021. The following information pertains to this company. 1. Pretax financial income for 2021 is $94,000. 2. The tax rate enacted for 2021 and future years is 20%. 3. Differences between the 2021 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,500. Warranty deductions per the tax return amount to $1,800. (b) Gross profit on construction contracts using the percentage-of-completion method per...
Winx Company began operations at the beginning of 2018.The following information is available for this...
Winx Company began operations at the beginning of 2018. The following information is available for this company: • Pretax financial income for 2018 is $300,000. • Differences between the 2018 income statement and tax return include: - Depreciation on property, plant and equipment for financial reporting purposes was $20,000 lower than for tax purposes. - Gross profit on construction contracts using the percentage-of-completion method equaled $82,000 in the company’s books. Gross profit on construction contracts for tax purposes was $67,000....
ABC Company began operations on August 1, 2021 and entered into the following transactions during 2021:...
ABC Company began operations on August 1, 2021 and entered into the following transactions during 2021: 1. On August 1, ABC Company sold common stock to owners in the amount of $100,000 and borrowed $200,000 from the local bank on a 10-month, 12% note payable. 2. On September 1, ABC Company purchased a piece of equipment costing $80,000 by paying $50,000 in cash and agreeing to pay the remainder within six months. The equipment was assigned a 5-year life and...
The following information pertains to ABC Company. Estimated netincome for 2019 = $500 Beginning retained...
The following information pertains to ABC Company. Estimated net income for 2019 = $500 Beginning retained earnings, January 1, 2019 = $2,100 Estimated distributions to owners during 2019 = $300 What is the company's ending balance in retained earnings at the end of the year, December 31, 2019?
The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning...
The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning inventory 300 units @ $ 18 Apr. 1 Purchased 2,600 units @ $ 23 Oct. 1 Purchased 900 units @ $ 24 During Year 3, Parvin sold 3,230 units of inventory at $44 per unit and incurred $18,900 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income...
The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning...
The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning inventory 400 units @ $ 19 Apr. 1 Purchased 2,500 units @ $ 24 Oct. 1 Purchased 1,100 units @ $ 25 During Year 3, Parvin sold 3,400 units of inventory at $41 per unit and incurred $18,000 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income...
The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory 300 units...
The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory 300 units @ $ 19 Apr. 1 Purchased 2,900 units @ $ 24 Oct. 1 Purchased 1,000 units @ $ 25 During the year, Parvin sold 3,570 units of inventory at $43 per unit and incurred $17,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin...
1. The following information pertains to Julia & Company: March 1 Beginning inventory = 30 units...
1. The following information pertains to Julia & Company: March 1 Beginning inventory = 30 units @ $5.40 March 3 Purchased 14 units @ 3.50 March 9 Sold 24 units @ 8.50 What is the ending inventory balance for Julia & Company assuming that it uses FIFO? a. $49 b. $81 c. $64 d. $108 2. Northwest Fur Co. started the year with $96,000 of merchandise inventory on hand. During the year, $415,000 in merchandise was purchased on account with...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT