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Current Attempt in Progress The accounting records of Cullumber Inc. show the following data for 2025 (its first year of operations). 1. Life insurance expense on officers was $8,900. 2. Equipment was acquired in early January for $278,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Cullumber used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,800. 4. 5. Product warranties were estimated to be $52,300 in 2025. Actual repair and labor costs related to the warranties in 2025 were $10,400. The remainder is estimated to be paid evenly in 2026 and 2027. Gross profit on an accrual basis was $104,000. For tax purposes, $79,200 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,000. 7. Pretax financial income was $803,200. The tax rate is 30%. Prepare a schedule starting with pretax financial income in 2025 and ending with taxable income in 2025. Schedule of Pretax Financial Income and Taxable Income for 2025 Pretax financial income Permanent differences $ 803200 Insurance Expense Pollution Fines Bond Interest Revenue 8900 4000 (3800) $ 812300 Temporary differences Depreciation Expense✓ $ (27800) Installment Sales Warranty Expense $ Taxable income (24800) 41900 801600 Prepare the journal entry for 2025 to record income taxes payable, income tax expense, and deferred income taxes. (List all debit entries before credit entries. 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 Income Tax Expense Deferred Tax Asset Deferred Tax Liability Income Tax Payable Debit 243630 1140 Credit 4290 240480

Current Attempt in Progress The accounting records of Cullumber Inc. show the following data for 2025 (its first year of operations). 1. Life insurance expense on officers was $8,900. 2. Equipment was acquired in early January for $278,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Cullumber used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,800. 4. 5. Product warranties were estimated to be $52,300 in 2025. Actual repair and labor costs related to the warranties in 2025 were $10,400. The remainder is estimated to be paid evenly in 2026 and 2027. Gross profit on an accrual basis was $104,000. For tax purposes, $79,200 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,000. 7. Pretax financial income was $803,200. The tax rate is 30%. Prepare a schedule starting with pretax financial income in 2025 and ending with taxable income in 2025. Schedule of Pretax Financial Income and Taxable Income for 2025 Pretax financial income Permanent differences $ 803200 Insurance Expense Pollution Fines Bond Interest Revenue 8900 4000 (3800) $ 812300 Temporary differences Depreciation Expense✓ $ (27800) Installment Sales Warranty Expense $ Taxable income (24800) 41900 801600 Prepare the journal entry for 2025 to record income taxes payable, income tax expense, and deferred income taxes. (List all debit entries before credit entries. 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 Income Tax Expense Deferred Tax Asset Deferred Tax Liability Income Tax Payable Debit 243630 1140 Credit 4290 240480

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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Current Attempt in Progress The accounting records of Cullumber Inc. show the following data for 2025 (its first year of operations). 1. Life insurance expense on officers was $8,900. 2. Equipment was acquired in early January for $278,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Cullumber used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,800. 4. Product warranties were estimated to be $52,300 in 2025. Actual repair and labor costs related to the warranties in 2025 were $10,400. The remainder is estimated to be paid evenly in 2026 and 2027. Gross profit on an accrual basis was $104,000. For tax purposes, $79,200 was recorded on the installment-sales method. 5. 6. Fines incurred for pollution violations were $4,000. 7. Pretax financial income was $803,200. The tax rate is 30%. Prepare a schedule starting with pretax financial income in 2025 and ending with taxable income in 2025. Schedule of Pretax Financial Income and Taxable Income for 2025 Pretax financial income $ Permanent differences Insurance Expense Pollution Fines Bond Interest Revenue 803200 8900 4000 (3800) $ 812300 Temporary differences Depreciation Expense $ (27800) Installment Sales Warranty Expense Taxable income $ (24800) 41900 801600 Prepare the journal entry for 2025 to record income taxes payable, income tax expense, and deferred income taxes. (List all debit entries before credit entries. 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 Income Tax Expense Deferred Tax Asset Deferred Tax Liability Income Tax Payable Debit 243630 1140 Credit 4290 240480
Transcribed Image Text:Current Attempt in Progress The accounting records of Cullumber Inc. show the following data for 2025 (its first year of operations). 1. Life insurance expense on officers was $8,900. 2. Equipment was acquired in early January for $278,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Cullumber used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,800. 4. Product warranties were estimated to be $52,300 in 2025. Actual repair and labor costs related to the warranties in 2025 were $10,400. The remainder is estimated to be paid evenly in 2026 and 2027. Gross profit on an accrual basis was $104,000. For tax purposes, $79,200 was recorded on the installment-sales method. 5. 6. Fines incurred for pollution violations were $4,000. 7. Pretax financial income was $803,200. The tax rate is 30%. Prepare a schedule starting with pretax financial income in 2025 and ending with taxable income in 2025. Schedule of Pretax Financial Income and Taxable Income for 2025 Pretax financial income $ Permanent differences Insurance Expense Pollution Fines Bond Interest Revenue 803200 8900 4000 (3800) $ 812300 Temporary differences Depreciation Expense $ (27800) Installment Sales Warranty Expense Taxable income $ (24800) 41900 801600 Prepare the journal entry for 2025 to record income taxes payable, income tax expense, and deferred income taxes. (List all debit entries before credit entries. 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 Income Tax Expense Deferred Tax Asset Deferred Tax Liability Income Tax Payable Debit 243630 1140 Credit 4290 240480
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