Question

In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $66 million. Taxable income is $260 million in 2021. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Prepare the appropriate journal entry to record income taxes in 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Answer 1

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Answer 2

Answer:

Answer and Explanation:

The Journal entry is shown below:-

1. Income Tax Expense Dr, $336 million  

Deferred Tax Assets Dr, $29 million

($116 million  × 25%)

         To Income Tax Payable $365 million

($1,460 × 25%)

(Being income tax and deferred tax is recorded)

2. Income Tax Expense Dr, $400 million

         To Income Tax Payable  $340  million

($1,360 × 25%)

         To Deferred Tax Assets $60 million

(($354.0 million - $116 million)  × 25%)

(Being income tax and deferred tax is recorded)

Step-by-step explanation: