Corp ABS reported $1,500,000 of pretax financial income in 2022. ABS has one book - tax difference of $100,000, due to unearned revenue received in 2022 that will not be earned until 2024. In 2022, ABS was subject to a 25% tax rate. In 2023, the government announced a corporate tax rate increase to 30% starting in 2024. Therefore, in 2024, ABS will be subject to a 30% tax rate. Prepare the journal entry for ABS to record its income taxes payable, deferred income taxes, and income tax expense for 2022. Also record the adjusting entry to account for the tax rate increase in 2023.
Corp ABS reported $1,500,000 of pretax financial income in 2022. ABS has one book - tax difference of $100,000, due to unearned revenue received in 2022 that will not be earned until 2024. In 2022, ABS was subject to a 25% tax rate. In 2023, the government announced a corporate tax rate increase to 30% starting in 2024. Therefore, in 2024, ABS will be subject to a 30% tax rate. Prepare the journal entry for ABS to record its income taxes payable, deferred income taxes, and income tax expense for 2022. Also record the adjusting entry to account for the tax rate increase in 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Corp ABS reported $1,500,000 of pretax financial income in 2022. ABS has one book - tax
difference of $100, 000, due to unearned revenue received in 2022 that will not be earned until
2024. In 2022, ABS was subject to a 25% tax rate. In 2023, the government announced a
corporate tax rate increase to 30% starting in 2024. Therefore, in 2024, ABS will be subject to a
30% tax rate. Prepare the journal entry for ABS to record its income taxes payable, deferred
income taxes, and income tax expense for 2022. Also record the adjusting entry to account for the
tax rate increase in 2023.
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