Question

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.)

Solutions

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 2 years ago
Next > < Previous

Related Solutions

1). Canner Co., organized on January 2, 2020, had pretax accounting income of $960,000 and taxable...
1). Canner Co., organized on January 2, 2020, had pretax accounting income of $960,000 and taxable income of $3,120,000 for the year ended                                                December 31, 2020. The only temporary difference is accrued product warranty costs which are expected to be paid as follows:                                                                                                 2021  ...
Allmond Corporation, organized on January 3, 2018, had pretax accounting income of $34 million and taxable...
Allmond Corporation, organized on January 3, 2018, had pretax accounting income of $34 million and taxable income of $44 million for the year ended December 31, 2018. The 2018 tax rate is 35%. The only difference between accounting income and taxable income is estimated product warranty costs. Expected payments and scheduled tax rates (based on recent tax legislation) are as follows: 2019 $ 4 million 30 % 2020 2 million 30 % 2021 2 million 30 % 2022 2 million...
Allmond Corporation, organized on January 3, 2018, had pretax accounting income of $15 million and taxable...
Allmond Corporation, organized on January 3, 2018, had pretax accounting income of $15 million and taxable income of $23 million for the year ended December 31, 2018. The 2018 tax rate is 40%. The only difference between accounting income and taxable income is estimated product warranty costs. Expected payments and scheduled tax rates (based on recent tax legislation) are as follows: 2019 $ 3 million 30 % 2020 1 million 30 % 2021 2 million 30 % 2022 2 million...
A reconciliation of Sunland Company's pretax accounting income with its taxable income for 2021, its first...
A reconciliation of Sunland Company's pretax accounting income with its taxable income for 2021, its first year of operations, is as follows: Pretax accounting income $3900000 Excess tax depreciation (189000) Taxable income $3711000 The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 30% in 2021, 25% in 2022 and 2023, and 20% in 2024. The total deferred tax liability to be reported on Sunland's balance sheet at...
tanhope, Inc. Reconciliation of Pretax Accounting Income to Taxable Income Year ended December 31, year 2...
tanhope, Inc. Reconciliation of Pretax Accounting Income to Taxable Income Year ended December 31, year 2 Pretax accounting income $678,000 Expenses recorded on books this year not deductible for tax purposes: Meals and entertainment expenses 12,000 Bad debts expense provision 15,000 27,000 Subtotal 705,000 Income recorded on books this year not subject to tax: Tax-exempt interest income 15,000 Unrealized gain (loss) on trading securities 8,000 Deductions on tax return not charged against book income this year: Depreciation expense 63,000 Bad...
Blossom Inc. began business on January 1, 2021. Its pretax financial income for the first 2...
Blossom Inc. began business on January 1, 2021. Its pretax financial income for the first 2 years was as follows: 2021 $360,000 2022 680,000 The following items caused the only differences between pretax financial income and taxable income. 1. In 2021, the company collected $396,000 of rent; of this amount, $132,000 was earned in 2021; the other $264,000 will be earned equally over the 2022–2023 period. The full $396,000 was included in taxable income in 2021. 2. The company pays...
Blossom Inc. began business on January 1, 2021. Its pretax financial income for the first 2...
Blossom Inc. began business on January 1, 2021. Its pretax financial income for the first 2 years was as follows: 2021 $250,000 2022 570,000 The following items caused the only differences between pretax financial income and taxable income. 1. In 2021, the company collected $363,000 of rent; of this amount, $121,000 was earned in 2021; the other $242,000 will be earned equally over the 2022–2023 period. The full $363,000 was included in taxable income in 2021. 2. The company pays...
Pharoah Inc. began business on January 1, 2021. Its pretax financial income for the first 2...
Pharoah Inc. began business on January 1, 2021. Its pretax financial income for the first 2 years was as follows: 2021 $300,000 2022 620,000 The following items caused the only differences between pretax financial income and taxable income. 1. In 2021, the company collected $378,000 of rent; of this amount, $126,000 was earned in 2021; the other $252,000 will be earned equally over the 2022–2023 period. The full $378,000 was included in taxable income in 2021. 2. The company pays...
Sherrod, Inc., reported pretax accounting income of $92 million for 2021. The following information relates to...
Sherrod, Inc., reported pretax accounting income of $92 million for 2021. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2021 exceeded that reported for tax purposes by $6 million. The installment receivable account at year-end 2021 had a balance of $8 million (representing portions of 2020 and 2021 installment sales), expected to be collected equally in 2022 and 2023. Sherrod was assessed a...
Sherrod, Inc., reported pretax accounting income of $72 million for 2021. The following information relates to...
Sherrod, Inc., reported pretax accounting income of $72 million for 2021. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2021 exceeded that reported for tax purposes by $3 million. The installment receivable account at year-end 2021 had a balance of $4 million (representing portions of 2020 and 2021 installment sales), expected to be collected equally in 2022 and 2023. Sherrod was assessed a...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT