Blossom Inc.'s only temporary difference at the beginning and end of 2024 is caused by a $3.69 million deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $1,107,000. In the third quarter of 2024, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $6,150,000, and taxable income is expected in all future years.
Blossom Inc.'s only temporary difference at the beginning and end of 2024 is caused by a $3.69 million deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $1,107,000. In the third quarter of 2024, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $6,150,000, and taxable income is expected in all future years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject : Accounting
Transcribed Image Text:Blossom Inc.'s only temporary difference at the beginning and end of 2024 is caused by a $3.69 million deferred gain for tax purposes
for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal
installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $1,107,000. In the third quarter of
2024, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $6,150,000,
and taxable income is expected in all future years.
Transcribed Image Text:Prepare the journal entry necessary to adjust the deferred tax liability when the new tax rate is enacted into law. (List debit entry
before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter O for the amounts)
Account Titles and Explanation
Deferred Tax Liability
Income Tax Payable
Debit
922.500
Credit
922,500
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