Gallo Light began operations in 2018. The company sometimes sells used warehouses on an installment basis. In those cases, Gallo Light reports income in its income statement in the year of the sale. In its income tax return, though, Gallo Light reports installment income by the installment method. Installment income in 2018 was $85,800, which Gallo Light expects to collect equally over the next three years. The tax rate is 30%, but based on an enacted law, is scheduled to become 35% in 2020. Gallo Light's pretax accounting income from the 2018 income statement was $823,000, which includes $33,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above. Required: 1. Prepare the appropriate journal entry to record Gallo Light's 2018 income taxes. 2. What is Gallo Light's 2018 net income? Complete this question by entering your answers in the tabs below.

Gallo Light began operations in 2018. The company sometimes sells used warehouses on an installment basis. In those cases, Gallo Light reports income in its income statement in the year of the sale. In its income tax return, though, Gallo Light reports installment income by the installment method. Installment income in 2018 was $85,800, which Gallo Light expects to collect equally over the next three years. The tax rate is 30%, but based on an enacted law, is scheduled to become 35% in 2020. Gallo Light's pretax accounting income from the 2018 income statement was $823,000, which includes $33,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above. Required: 1. Prepare the appropriate journal entry to record Gallo Light's 2018 income taxes. 2. What is Gallo Light's 2018 net income? Complete this question by entering your answers in the tabs below.

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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