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AysviL [449]
2 years ago
6

Taxable income and pretax financial income would be identical for Skysong Co. except for its treatments of gross profit on insta

llment sales and estimated costs of warranties. The following income computations have been prepared.
Taxable income 2019 2020 2021
Excess of revenues over
expenses (excluding two
temporary differences) $154,000 $191,000 $88,100
Installment gross profit
collected 8,500 8,500 8,500
Expenditures for warranties (4,500) (4,500) (4,500)
Taxable income $158,000 $195,000 $92,100
Pretax financial income 2019 2020 2021
Excess of revenues over
expenses (excluding two
temporary differences) $154,000 $191,000 $88,100
Installment gross profit
recognized 25,500 -0- -0-
Estimated cost of
warranties (13,500) -0- -0-
Income before taxes $166,000 $191,000 $88,100
The tax rates in effect are 2019, 40%; 2020 and 2021, 45%. All tax rates were enacted into law on January 1, 2019. No deferred income taxes existed at the beginning of 2019. Taxable income is expected in all future years. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016, 2017, and 2018.
Business
1 answer:
inessss [21]2 years ago
5 0

Answer:

See the journal entry below.

Explanation:

Before preparing the journal entry, the following are calculated first:

Income tax expense in 2019 = (Taxable income in 2019 * Tax rate in 2019) + (Taxable income in 2020 * Tax rate in 2020) + (Taxable income in 2021 * Tax rate in 2021) = ($158,000 * 40%) + ($195,000 * 45%) + ($92,100 * 45%) = $193,395

Deferred tax liability in 2019 = (Taxable income in 2020 * Tax rate in 2020) + (Taxable income in 2021 * Tax rate in 2021) = ($195,000 * 45%) + ($92,100 * 45%) = $129,195

Income tax payable in 2019 = Taxable income in 2019 * Tax rate in 2019 = $158,000 * 40% = $63,200

Income tax payable in 2020 = Taxable income in 2020 * Tax rate in 2020 = $195,000 * 45% = $87,750

Income tax payable in 2021 = Taxable income in 2021 * Tax rate in 2021 = $92,100 * 45% = $41,445

The journal entry will look as follows:

<u>Date                  General journal                  Debit ($)         Credit ($)    </u>

31 Dec 2019      Income tax expense          193,395  

                             Deferred tax liability                                129,195      

                             Income tax payable                                 63,200

<u><em>                            (To record income tax payable.)                                 </em></u>

31 Dec 2020     Deferred tax liability            87,750      

                             Income tax payable                                 87,750

<u><em>                            (To record income tax payable.)                                 </em></u>

31 Dec 2021     Deferred tax liability            41,445      

                             Income tax payable                                41,445

<u><em>                            (To record income tax payable.)                                 </em></u>

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Answer:

$55,000

Explanation:

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We can then calculate as follow:

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3 0
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Explanation:

it is a document given by the supplier,which contains

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3 years ago
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puteri [66]

Answer:

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Explanation:

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The price of a stock is $64. A trader buys 1 put option contract on the stock with a strike price of $60 when the option price i
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Answer:

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Explanation:

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