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nlexa [21]
3 years ago
8

Typical Corp. reported a deferred tax liability of $6,000,000 for the year ended December 31, 2017, when the tax rate was 40%. T

he deferred tax liability was related to a temporary difference of $15,000,000 caused by an installment sale in 2017. The temporary difference is expected to reverse in 2019 when the income deferred from taxation will become taxable. There are no other temporary differences. Assume a new tax law passed in 2018 and the tax rate, which will remain at 40% through December 31, 2018, will become 48% for tax years beginning after December 31, 2018. Pretax accounting income and taxable income for the year 2018 is $30,000,000.
Required:
Prepare a compound journal entry to record Typical's income tax expense for the year 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Business
1 answer:
Alex_Xolod [135]3 years ago
6 0

Answer:

Income tax expense (Balancing figure) $13,200,000  

          To Deferred tax liability (8% × $15,000,000)  $1,200,000

          To Income tax payable ($30,000,000 × 40%)  $12,000,000

(Being the income tax expense is recorded)

Explanation:

The compound journal entry is shown below:

Income tax expense (Balancing figure) $13,200,000  

          To Deferred tax liability (8% × $15,000,000)  $1,200,000

          To Income tax payable ($30,000,000 × 40%)  $12,000,000

(Being the income tax expense is recorded)

For recording this, we debited the income tax expense as it increased the expenses and at the same time it also increased the liabilities i.e deferred tax liability and income tax payable so it would be credited

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Answer:

                                                                  Item  cash      Net income  

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b  Adjusting entry for use of supplies            -                     -$30

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                                             Or

   Made sales on account                               -                   $1,297

d Received cash from customer on acct     $850                  -

                                           Or

   Received cash from customer on acct     $865                  -

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                                            Or

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3 0
3 years ago
Corporation includes $200,000 of $1 par common stock and $400,000 par of 6% cumulative preferred stock. The board of directors o
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Answer:

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Explanation:

The cumulative preferred stock is the stock that accumulates dividends when the dividends are partially or not paid at all in a certain year. The dividends must be paid in the future.

The common stock holders are paid after the preferred stockholders are paid.

The preferred stock dividend per year = 400000 * 0.06 = $24000 per year

As the cash dividends paid in 2019 and 2020 are $20000 each,

The dividend outstanding on preferred stocks for 2019 is = 24000 - 20000 = $4000

Similarly, the dividends outstanding on preferred stocks for 2020 is = 24000 - 20000 = $4000

The total dividends outstanding at start of 2021 = 4000 + 4000 = $8000

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Total dividend on preferred stock = 24000 + 8000 = $32000

The amount of dividends that common stock holders will receive in 2021 = 50000 - 32000 = $18000

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Answer:

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