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riadik2000 [5.3K]
3 years ago
14

At the end of the prior year, Doubtful Inc. had a deferred tax asset of $18,500,000 attributable to its only timing difference,

a temporary difference of $47,000,000 in a liability for estimated expenses. At that time, a valuation allowance of $3,730,000 was established. At the end of the current year, the temporary difference is $42,000,000, and Doubtful determines that the balance in the valuation account should now be $5,000,000. Taxable income is $14,700,000 and the tax rate is 35% for all years.
Required:
Prepare journal entries to record Doubtful's income tax expense for the current year.
Business
1 answer:
iren [92.7K]3 years ago
7 0

Answer:

Journal entries to record Doubtful's income tax expense for the current year.

No   Account titles and Explanation             Debit'$    Credit'$

1       Income tax expense                             8,945,000

                  Deferred tax asset                                     3,800,000

                  [(42,000,000*35%) - 18,500,000]

                   Income taxes payable                               5,145,000

                   [(14,700,000*35%)]

         (To record tax expenses)

2        Income tax expense                            1,270,000

                 Valuation allowance - deferred tax asset  1,270,000

                   (3,730,000 - 5,000,000

          (To record valuation allowance)

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The type of overhead costing system that would be the best fit for Lunker is: Traditional costing system using design hours as the basis for allocation.

<h3>What is the Traditional Costing System?</h3>

The traditional costing system is a method applied in accounting that aims at determining the cost of production. One driver is assigned as the basis of allocation.

In the case of Lunker Lures above, the driver that is used as the basis of allocation should be design hours.

Learn more about the Traditional Costing System here:

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3 0
3 years ago
A machine costing $251,800 was purchased May 1. The machine should be obsolete after three years and, therefore, no longer usefu
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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

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5 0
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Answer:

$4,522

Explanation:

As the restaurant is not acquired so the amount of $28,000 would be non-deductible

Also if the expenses is incurred so the maximum deduction allowed is in excess of $50,000 is $5,000

Now

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And,  

= $5,000 - $1,000

= $4,000 deduction

Now

= $51,000 - $4,000

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QS 15-4 Raw materials journal entries LO P1 During the current month, a company that uses job order costing purchases $90,000 in
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Answer:

The journal entries are shown below:

Explanation:

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8 0
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