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 1 year ago

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