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
Related questions
Question
7
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education