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 13440 Credit 18600 Current Attempt in Progress The accounting records of Windsor Inc. show the following data for 2025 (its first year of operations). 1. Life insurance expense on officers was $8,300. 2. Equipment was acquired in early January for $323,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Windsor used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $4,000. 4. 5. Product warranties were estimated to be $54,000 in 2025. Actual repair and labor costs related to the warranties in 2025 were $9,200. The remainder is estimated to be paid evenly in 2026 and 2027. Gross profit on an accrual basis was $98,000. For tax purposes, $68,300 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,200. 7. Pretax financial income was $739,600. The tax rate is 30%.
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 13440 Credit 18600 Current Attempt in Progress The accounting records of Windsor Inc. show the following data for 2025 (its first year of operations). 1. Life insurance expense on officers was $8,300. 2. Equipment was acquired in early January for $323,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Windsor used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $4,000. 4. 5. Product warranties were estimated to be $54,000 in 2025. Actual repair and labor costs related to the warranties in 2025 were $9,200. The remainder is estimated to be paid evenly in 2026 and 2027. Gross profit on an accrual basis was $98,000. For tax purposes, $68,300 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,200. 7. Pretax financial income was $739,600. The tax rate is 30%.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 1BD
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Transcribed Image Text: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
13440
Credit
18600
Transcribed Image Text:Current Attempt in Progress
The accounting records of Windsor Inc. show the following data for 2025 (its first year of operations).
1.
Life insurance expense on officers was $8,300.
2.
Equipment was acquired in early January for $323,000. Straight-line depreciation over a 5-year life is used, with no salvage
value. For tax purposes, Windsor used a 30% rate to calculate depreciation.
3.
Interest revenue on State of New York bonds totaled $4,000.
4.
5.
Product warranties were estimated to be $54,000 in 2025. Actual repair and labor costs related to the warranties in 2025
were $9,200. The remainder is estimated to be paid evenly in 2026 and 2027.
Gross profit on an accrual basis was $98,000. For tax purposes, $68,300 was recorded on the installment-sales method.
6.
Fines incurred for pollution violations were $4,200.
7.
Pretax financial income was $739,600. The tax rate is 30%.
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