ALSO: Prepare the journal entry to record income taxes payable, deferred taxes, and income tax expense for 2020. (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 0 for the amounts.) During 2020, Sheffield Co.'s first year of operations, the company reports pretax financial income at $252,300. Sheffield's enacted taxrate is 45% for 2020 and 20% for all later years. Sheffield expects to have taxable income in each of the next 5 years. The effects onfuture tax returns of temporary differences existing at December 31, 2020, are summarized as follows.Future Years202220232025Total20212024Future taxable (deductible) amounts:Installment salesDepreciationUnearned rent$31,300 $31,300 $31,3005,800(48,500) (48,500)$93,90029,000(97,000)5,8005,800 $5,800 $5,800Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative signpreceding the number e.g. -45 or parentheses e.g. (45).)Deferred TaxFuture TaxableTemporaryDifference(Deductible) AmountsTax Rate(Asset)Liability$Installment sales$93,9001%Depreciation29,0001%Unearned rent(97,000)1%TotalsCompute taxable income for 2020.HA1%24

Deferred tax assets: A Deferred Tax Asset is an asset on a Company's balance sheet that may be used…

Answered: During 2020, sheffield Co.'s first year…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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ALSO: Prepare the journal entry to record income taxes payable, deferred taxes, and income tax expense for 2020. (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 0 for the amounts.)

During 2020, Sheffield Co.'s first year of operations, the company reports pretax financial income at $252,300. Sheffield's enacted tax
rate is 45% for 2020 and 20% for all later years. Sheffield expects to have taxable income in each of the next 5 years. The effects on
future tax returns of temporary differences existing at December 31, 2020, are summarized as follows.
Future Years
2022
2023
2025
Total
2021
2024
Future taxable (deductible) amounts:
Installment sales
Depreciation
Unearned rent
$31,300 $31,300 $31,300
5,800
(48,500) (48,500)
$93,900
29,000
(97,000)
5,800
5,800 $5,800 $5,800
Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45).)
Deferred Tax
Future Taxable
Temporary
Difference
(Deductible) Amounts
Tax Rate
(Asset)
Liability
$
Installment sales
$93,900
1%
Depreciation
29,000
1%
Unearned rent
(97,000)
1%
Totals
Compute taxable income for 2020.
HA
1%24

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