The accounting records of Concord Inc. show the following data for 2020 (its first year of operations). 1.   Life insurance expense on officers was $9,300. 2.   Equipment was acquired in early January for $277,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Concord used a 30% rate to calculate depreciation. 3.   Interest revenue on State of New York bonds totaled $4,300. 4.   Product warranties were estimated to be $48,500 in 2020. Actual repair and labor costs related to the warranties in 2020 were $9,000. The remainder is estimated to be paid evenly in 2021 and 2022. 5.   Gross profit on an accrual basis was $103,000. For tax purposes, $69,100 was recorded on the installment-sales method. 6.   Fines incurred for pollution violations were $4,500. 7.   Pretax financial income was $793,300. The tax rate is 30%.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question
The accounting records of Concord Inc. show the following data for 2020 (its first year of operations).

1.   Life insurance expense on officers was $9,300.
2.   Equipment was acquired in early January for $277,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Concord used a 30% rate to calculate depreciation.
3.   Interest revenue on State of New York bonds totaled $4,300.
4.   Product warranties were estimated to be $48,500 in 2020. Actual repair and labor costs related to the warranties in 2020 were $9,000. The remainder is estimated to be paid evenly in 2021 and 2022.
5.   Gross profit on an accrual basis was $103,000. For tax purposes, $69,100 was recorded on the installment-sales method.
6.   Fines incurred for pollution violations were $4,500.
7.   Pretax financial income was $793,300. The tax rate is 30%.

(a)

 
 
Prepare a schedule starting with pretax financial income in 2020 and ending with taxable income in 2020.

Schedule of Pretax Financial Income
and Taxable Income for 2020
Pretax financial income  
$
Permanent differences    
 
 
 
 
 
 
 
 
 
 
 
 
   
 
Temporary differences    
 
 
 
 
 
 
 
 
 
 
 
 
Taxable income  
 
 
 

(b)

 
 
Prepare the journal entry for 2020 to record income taxes payable, income tax expense, and deferred income taxes. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit
 
 
 
 
 
 
 
 
 
 
 
 
 

eTextbook and Media

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 4 images

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education