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Andru [333]
3 years ago
14

A-Z Construction Company was organized on May 1 of the current year. On May 2, A-Z Construction prepaid $18,480 to the city for

taxes (license fees) for the next 12 months and debited the prepaid taxes account. A-Z Construction is also required to pay in January an annual tax (on property) for the current calendar year of $45,000.a) Journalize the two adjusting entries required to bring accounts affected by the two taxes up to date as of December 31, the end of current year.b) what is the amount of tax expense?
Business
1 answer:
denis23 [38]3 years ago
8 0

Answer:

12,320

57,320

Explanation:

<u>Given:</u>

Total Tax = $18,480 (For 12 months)

Annual Tax on Property = $45,000

Calender's Year (1st Jan - 31st Dec)

<u>Computation.</u>

A. Tax for (1st May - 31st Dec )

($18,480 / 12 month) x 8 month

= $1,540 x 8

= $12,320

Taxes expense =  $12,320

Prepaid tax = $12,320

B. Total Amount of tax Expense

Tax Expense        = $12,320

<u>Add: Annual Tax = $45,000</u>

Total tax expenses = $57,320

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