The Moore Company has sales of $500,000 that are recorded for book purposes in 2014. For tax purposes, the company uses the installment sales method, resulting in revenue of $150,000 in 2014 and $350,000 in 2015. A temporary difference of $350,000 originates in 2014 and reverses in 2015. Assume that the enacted tax rate for 2014 is 30 percent and that the enacted tax rate for 2015 is 40 percent and is known at the time the Deferred Tax account is established. The deferred tax for the year 2014 results in a Deferred Tax a) Asset debit entry of $105,000 b) Liability credit entry of $105,000 c) Asset debit entry of $140,000 d) Liability credit entry of $140,000.

The Moore Company has sales of $500,000 that are recorded for book purposes in 2014. For tax purposes, the company uses the installment sales method, resulting in revenue of $150,000 in 2014 and $350,000 in 2015. A temporary difference of $350,000 originates in 2014 and reverses in 2015. Assume that the enacted tax rate for 2014 is 30 percent and that the enacted tax rate for 2015 is 40 percent and is known at the time the Deferred Tax account is established. The deferred tax for the year 2014 results in a Deferred Tax a) Asset debit entry of $105,000 b) Liability credit entry of $105,000 c) Asset debit entry of $140,000 d) Liability credit entry of $140,000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 2RE: Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of...

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J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2016. The only difference between accounting and taxable income is estimated product warranty costs for sales this year. Warranty payments are expected to be in equal amounts over the next three years. Recent tax legislation will change the tax rate from the current 40% to 30% in 2018. Determine the amounts necessary to record J-Matt’s income taxes for 2016 and prepare the appropriate journal entry.
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The company reported $58,000 of depreciation expense on its income statement in 2015 and $32,000 in 2016. On its tax returns, Morgan deducted $84,000 for depreciation in 2015 and $94,000 in 2013. The 2016 tax return shows a tax obligation (liability) of $38,400 based on a 40% tax rate. Deferred Income Taxes What is the deferred tax liability for 2016?
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Johnny Bravo Company began operations in 2017 and has provided the following information.1. Pretax financial income for 2017 is $100,000.2. The tax rate enacted for 2017 and future years is 40%.3. Differences between the 2017 income statement and tax return are listed below.(a) Warranty expense accrued for financial reporting purposes amounts to $5,000. Warranty deductions per the tax return amount to $2,000.(b) Gross profit on construction contracts using the percentage-of-completion method for books amounts to $92,000. Gross profit on construction contracts for tax purposes amounts to $62,000.(c) Depreciation of property, plant, and equipment for financial reporting purposes amounts to $60,000. Depreciation of these assets amounts to $80,000 for the tax return.(d) A $3,500 fine paid for violation of pollution laws was deducted in computing pretax financial income.(e) Interest revenue earned on an investment in tax-exempt municipal bonds amounts to $1,400.4. Taxable income is expected…