In: Accounting
Problem 16-5 Change in tax rate; record taxes for four years [LO16-1, 16-4, 16-5]
The DeVille Company reported pretax accounting income on its
income statement as follows:
2018 | $ | 405,000 | |
2019 | 325,000 | ||
2020 | 395,000 | ||
2021 | 435,000 | ||
Included in the income of 2018 was an installment sale of property
in the amount of $52,000. However, for tax purposes, DeVille
reported the income in the year cash was collected. Cash collected
on the installment sale was $20,800 in 2019, $26,000 in 2020, and
$5,200 in 2021.
Included in the 2020 income was $21,000 interest from investments
in municipal bonds.
The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new
tax legislation was passed reducing the tax rate to 25% for the
years 2020 and beyond.
Required:
Prepare the year-end journal entries to record income taxes for the
years 2018–2021. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account field.)