Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $600,000 and with anexpected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% Inthose years. Pretax accounting Income the first year the equipment was used was $700,000, which includes interest revenue of$15,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting Income andtaxable income. The enacted tax rate is 25%.Prepare the journal entry to record income taxes.Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.View transaction listView journal entry worksheetNo1TransactionGeneral JournalIncome tax expenseIncome tax payableDeferred tax liabilityDebitCredit171,250

Step 1:Introduction Step 2:CalculationStep 3:Journal Entries

Answered: Shannon Polymers uses straight-line…

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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Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $800,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $900,000, which includes interest revenue of $20,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes.
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Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $780,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $880,000, which includes interest revenue of $25,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes.
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