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b. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers b Date Dec. 31 Income Tax Expense Deferred Tax Asset Account Name Deferred Tax Liability Income Tax Payable To record income tax expense c. Compute pretax GAAP income. Pretax GAAP Income: $ 0 > > > > Dr. 0 OOOO 0 0 Cr. 000 43.125

b. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers b Date Dec. 31 Income Tax Expense Deferred Tax Asset Account Name Deferred Tax Liability Income Tax Payable To record income tax expense c. Compute pretax GAAP income. Pretax GAAP Income: $ 0 > > > > Dr. 0 OOOO 0 0 Cr. 000 43.125

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Recording Multiple Temporary Differences The following annual information is available for Rapper Inc. • Taxable income: $172,500 Tax rate: 25% Accounts receivable on installment sales - GAAP basis: $225,000 - Tax basis: $0 Deferred revenue on services - GAAP basis: $52,500 - Tax basis: $0 • No deferred tax balances at beginning of the year Required a. Prepare schedules to compute the deferred tax balances on December 31. *Note: Do not use negative signs with your answers. GAAP basis Tax basis Difference between GAAP and tax bases $ Tax rate Deferred tax liability, ending balance Accounts Receivable 225,000 Date Dec. 31 Income Tax Expense Deferred Tax Asset $ $ Deferred Tax Liability Income Tax Payable To record income tax expense $ GAAP basis Tax basis Difference between GAAP and tax bases $ Tax rate Deferred tax asset, ending balance $ c. Compute pretax GAAP income. Pretax GAAP Income: $ 0 Deferred Revenue 52.500 $ Account Name $ 225,000 25% 56,250 b. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). 0 52,500 25% 13.125 0 < < < < Dr. 000 0 Cr. 0 0 0 43.125
Transcribed Image Text:Recording Multiple Temporary Differences The following annual information is available for Rapper Inc. • Taxable income: $172,500 Tax rate: 25% Accounts receivable on installment sales - GAAP basis: $225,000 - Tax basis: $0 Deferred revenue on services - GAAP basis: $52,500 - Tax basis: $0 • No deferred tax balances at beginning of the year Required a. Prepare schedules to compute the deferred tax balances on December 31. *Note: Do not use negative signs with your answers. GAAP basis Tax basis Difference between GAAP and tax bases $ Tax rate Deferred tax liability, ending balance Accounts Receivable 225,000 Date Dec. 31 Income Tax Expense Deferred Tax Asset $ $ Deferred Tax Liability Income Tax Payable To record income tax expense $ GAAP basis Tax basis Difference between GAAP and tax bases $ Tax rate Deferred tax asset, ending balance $ c. Compute pretax GAAP income. Pretax GAAP Income: $ 0 Deferred Revenue 52.500 $ Account Name $ 225,000 25% 56,250 b. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). 0 52,500 25% 13.125 0 < < < < Dr. 000 0 Cr. 0 0 0 43.125
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