Hilyard Management reported pretax accounting income of $150, $130, and $130 million in 2021, 2022, and 2023, which included $60 million from instalment sales of property and $5 million interest from investments in municipal bonds in 2021, 2022, and 2023. The instalment sales income is reported for tax purposes in 2022 ($15 million) and 2023 ($45 million). The enacted tax rate is 25% each year. The $5 million in municipal bond interest represents a $5 million permanent difference. Required (Please put Dr in front of your debits and Cr in front of your credits, else it is hard to see what is a debit or credit in the d2L output): 1. Prepare the journal entry recording income tax expense, income tax payable, and adjust to your deferred tax asset or liability for 2022. Dr. Income Tax Expense 35 Cr. Income Tax Payable 31.25 Cr. Deferred Tax Liability 3.75 Dr. Income Tax Payable 31.25 Dr. Deferred Tax Liability 3.75 Cr. Income Tax Expense 35 Dr. Income Tax Expense 3.75 Dr. Deferred Tax Liability 31.25 Cr. Income Tax Payable 35

Hilyard Management reported pretax accounting income of $150, $130, and $130 million in 2021, 2022, and 2023, which included $60 million from instalment sales of property and $5 million interest from investments in municipal bonds in 2021, 2022, and 2023. The instalment sales income is reported for tax purposes in 2022 ($15 million) and 2023 ($45 million). The enacted tax rate is 25% each year. The $5 million in municipal bond interest represents a $5 million permanent difference. Required (Please put Dr in front of your debits and Cr in front of your credits, else it is hard to see what is a debit or credit in the d2L output): 1. Prepare the journal entry recording income tax expense, income tax payable, and adjust to your deferred tax asset or liability for 2022. Dr. Income Tax Expense 35 Cr. Income Tax Payable 31.25 Cr. Deferred Tax Liability 3.75 Dr. Income Tax Payable 31.25 Dr. Deferred Tax Liability 3.75 Cr. Income Tax Expense 35 Dr. Income Tax Expense 3.75 Dr. Deferred Tax Liability 31.25 Cr. Income Tax Payable 35

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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Ehrlich Company had the following information for 2021. 1. Pretax financial income for 2021 is $100,000. 2. The tax rate enacted for 2021 and future years is 20%. 3. Differences between the 2021 income statement and tax return are listed below: a. Warranty expense accrued for financial reporting purposes amounts to $7,000. Warranty deductions per the tax return amount to $2,000. b. Gross profit on construction contracts using the percentage-of-completion method per books amounts to $92,000. Gross profit on construction contracts for tax purposes amounts to $67,000. c. Depreciation of property, plant, and equipment for financial reporting purposes amounts to $60,000. Depreciation of these assets amounts to $80,000 for the tax return. d. A $3,500 fine paid for violation of pollution laws was deducted in computing pretax financial income. e. Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. Instructions: a. Compute…
Asam lects $220 million in withheld and estimated income tax payments during the 2022 calendar year and an additional $20 million in wted and estimated income tax payments in January 2023 applicable to its 2022 calendar year. The state also expects to receive $6 million payments and refunt claims of 15 million for 2022 income tax returns filed by April 15, 2023. The state considers payments received who aretus led by April 15 to be available and refund claims received by that date are considered liabilities for 2022. Now much revenue should the state report for its year ending December 31, 2022? OLXW silion