Problem 16-6 (IAA)Complex Company reported the following informationrelating to income before tax for accounting purposes:2021202220232024Income tax rateIn 2021, the entity recognized doubtful accounts of P100,000.The doubtful accounts were considered worthless oruncollectible in 2022.2,000,0003,000,0004,000,0005,000,00025%Analysis of the tax and book records disclosed P120,000 inunearned rent income on December 31, 2021 that had beenrecognized as taxable income in 2021 when the cash was received.Also on December 31, 2021, estimated warranty cost ofP300,000 had been recognized as expense on the books in2021 when the product sales were made but is not deductiblefor tax purposes until paid.The unearned rent income on December 31, 2021 wasrealized and the actual warranty payments were made inthe following years:Rent income per book Actual warranty payments40,00040,00040,0002022'2023202420,00080,000200,000Required:1. Prepare journal entries for 2021, 2022, 2023 and 2024 torecord income tax expense and deferred income tax arisingfrom the temporary differences.2. Prepare a partial income statement for 2021.3.Prepare a partial income statement for 2022.

Deferred Income Tax - A liability that appears on a balance sheet as a result of an income…

Answered: Problem 16-6 (IAA) Complex Company…

Problem 16-6 (IAA) Complex Company reported the following info relating to income before tax for accounting purpo 2021 2022 023 2 3 4

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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Concept explainers

Payroll Entries

Payroll is a comprehensive record of employees that are paid by the company. Payroll classifies employees into various categories according to their function and pays scale (basic wage, allowance, income tax, other taxes, employee loans, etc.). Payroll processes form the bedrock of every organization as it contains sensitive information on the ‘wage and paycheck’ portion of the company’s strength—its employees. The organization needs to keep a track of the employees currently on the payroll, the net payout for the company, the record of transactions related to the employees including deductions and payroll taxes to identify the liability and its effect on the balance sheet (and other financial statements). Payroll records also include qualitative factors such as the conduct of the employee.

Question

Problem 16-6 (IAA)
Complex Company reported the following information
relating to income before tax for accounting purposes:
2021
2022
2023
2024
Income tax rate
In 2021, the entity recognized doubtful accounts of P100,000.
The doubtful accounts were considered worthless or
uncollectible in 2022.
2,000,000
3,000,000
4,000,000
5,000,000
25%
Analysis of the tax and book records disclosed P120,000 in
unearned rent income on December 31, 2021 that had been
recognized as taxable income in 2021 when the cash was received.
Also on December 31, 2021, estimated warranty cost of
P300,000 had been recognized as expense on the books in
2021 when the product sales were made but is not deductible
for tax purposes until paid.
The unearned rent income on December 31, 2021 was
realized and the actual warranty payments were made in
the following years:
Rent income per book Actual warranty payments
40,000
40,000
40,000
2022'
2023
2024
20,000
80,000
200,000
Required:
1. Prepare journal entries for 2021, 2022, 2023 and 2024 to
record income tax expense and deferred income tax arising
from the temporary differences.
2. Prepare a partial income statement for 2021.
3.
Prepare a partial income statement for 2022.

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