Nadal Inc. has two temporary differences at the end of 2019. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Nadal's accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 00202000 00202100 00202200 00202300 Taxable amounts $40,000) $50,000) $60,000) $80,000) Deductible amounts 0000000) 0(15,000) 0(19,000) 0000000) $40,000) $35,000) $41,000) $80,000) As of the beginning of 2019, the enacted tax rate is 34% for 2019 and 2020, and 20% for 2021–2024. At the beginning of 2019, the company had no deferred income taxes on its balance sheet. Taxable income for 2019 is $500,000. Taxable income is expected in all future years. Instructions a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. b. Indicate how deferred income taxes would be classified on the balance sheet at the end of 2019.
Nadal Inc. has two temporary differences at the end of 2019. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Nadal's accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 00202000 00202100 00202200 00202300 Taxable amounts $40,000) $50,000) $60,000) $80,000) Deductible amounts 0000000) 0(15,000) 0(19,000) 0000000) $40,000) $35,000) $41,000) $80,000) As of the beginning of 2019, the enacted tax rate is 34% for 2019 and 2020, and 20% for 2021–2024. At the beginning of 2019, the company had no deferred income taxes on its balance sheet. Taxable income for 2019 is $500,000. Taxable income is expected in all future years. Instructions a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. b. Indicate how deferred income taxes would be classified on the balance sheet at the end of 2019.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Nadal Inc. has two temporary differences at the end of 2019. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Nadal's accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows.
|
00202000
|
00202100
|
00202200
|
00202300
|
|
| Taxable amounts |
$40,000)
|
$50,000)
|
$60,000)
|
$80,000)
|
| Deductible amounts |
0000000)
|
0(15,000)
|
0(19,000)
|
0000000)
|
|
$40,000)
|
$35,000)
|
$41,000)
|
$80,000)
|
As of the beginning of 2019, the enacted tax rate is 34% for 2019 and 2020, and 20% for 2021–2024. At the beginning of 2019, the company had no
Instructions
a. Prepare the
b. Indicate how deferred income taxes would be classified on the balance sheet at the end of 2019.
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