In: Accounting
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 | 25 | % | |
Required:
1. Determine the amounts necessary to record
Allmond’s income taxes for 2018 and prepare the appropriate journal
entry.
Determine the amounts necessary to record Allmond’s income taxes for 2018. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Enter all amounts as positive values.)
|
Record 2018 income taxes.
2. What is Allmond’s 2018 net income?
Solution 1:
Solution 2:
Net income = Pretax income - Income tax expense = $15 - $6.90 = $8.10 million