Brief Exercise 16-10 (Algo) Calculate taxable Income [LO16-2, 16-5] Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $840,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30 %, 20%, and 10% In those years. Pretax accounting income the first year the equipment was used was $960,000, which includes Interest revenue of $28,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting Income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record Income taxes. Note: If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.
Brief Exercise 16-10 (Algo) Calculate taxable Income [LO16-2, 16-5] Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $840,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30 %, 20%, and 10% In those years. Pretax accounting income the first year the equipment was used was $960,000, which includes Interest revenue of $28,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting Income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record Income taxes. Note: If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Rahul
![Brief Exercise 16-10 (Algo) Calculate taxable income [LO16-2, 16-5]
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $840,000 and with an
expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in
those years. Pretax accounting income the first year the equipment was used was $960,000, which includes Interest revenue of
$28.000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and
taxable income. The enacted tax rate is 25%.
Prepare the Journal entry to record Income taxes.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
<
1
Record the income tax expense.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Income tax expense
Deferred tax liability
Income tax payable
Clear entry
Debit
Credit
View general Journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38541728-2632-4c41-975b-76745bc903b8%2F33b28b82-f97f-4726-a6a7-62b7775807a5%2Fsmm39bl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Brief Exercise 16-10 (Algo) Calculate taxable income [LO16-2, 16-5]
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $840,000 and with an
expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in
those years. Pretax accounting income the first year the equipment was used was $960,000, which includes Interest revenue of
$28.000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and
taxable income. The enacted tax rate is 25%.
Prepare the Journal entry to record Income taxes.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
Journal entry worksheet
<
1
Record the income tax expense.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Income tax expense
Deferred tax liability
Income tax payable
Clear entry
Debit
Credit
View general Journal
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