Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $680,000 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 $780,000, which includes interest revenue of $19,000 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $680,000 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 $780,000, which includes interest revenue of $19,000 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. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

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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