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In: Accounting

On January 2, 2021, Green Inc had pretax accounting income of $6,800,000 and taxable income of...

On January 2, 2021, Green Inc had pretax accounting income of $6,800,000 and taxable income of $9,680,000 for the year ended December 31, 2021. The 2021 tax rate was 25%. The only difference between book and taxable income is estimated warranty costs. Expected payments and scheduled enacted tax rates are as follows:

2022 $ 960,000 30 %
2023 480,000 30 %
2024 480,000 30 %
2025 960,000 35 %

  
Required:
Prepare one compound journal entry to record Green's provision for taxes for the year 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Expert Solution

Answer
Explanation :
Particulars 2021 2022 2023 2024 2025 Total
Accounting income $ 68,00,000
Add : Warranty Expenses $ 28,80,000 $    9,60,000 $    4,80,000 $    4,80,000 $    9,60,000
Taxable income $ 96,80,000
Estimated tax rate 25% 30% 30% 30% 35%
Tax payable Currently 2420000
Deferred tax rate $    2,88,000 $    1,44,000 $    1,44,000 $    3,36,000 $    9,12,000
Ledd : Op. bal. $               -  
Clo. Balance        9,12,000
Journal Entry
Date Account titles and explanation Debit Credit
2021 Income tax expense $ 28,80,000
Deferred tax Asset $    9,12,000
To, Income tax payable $ 37,92,000
( To record income tax expenses for the year)

ekkarill92 answered 1 year ago
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