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The pretax financial income of Larkspur Company differs from its taxable income throughout each of 4 years as follows. Pretax Year Financial Income 2020 2021 2022 2023 $307,000 348,000 328,000 437,000 Taxable Income $187,000 211,000 286.000 509,000 Tax Rate 35 % 20 % 20 % 20 %

The pretax financial income of Larkspur Company differs from its taxable income throughout each of 4 years as follows. Pretax Year Financial Income 2020 2021 2022 2023 $307,000 348,000 328,000 437,000 Taxable Income $187,000 211,000 286.000 509,000 Tax Rate 35 % 20 % 20 % 20 %

FINANCIAL ACCOUNTING
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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Current Attempt in Progress The pretax financial income of Larkspur Company differs from its taxable income throughout each of 4 years as follows. Year 2020 2021 2022 2023 Pretax Financial Income $307,000 348,000 328,000 437,000 (a) Taxable Income Tax Rate $187,000 35 % 211,000 20 % 286.000 20 % 509,000 20 % Pretax financial income for each year includes a nondeductible expense of $32,000 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2020.
Transcribed Image Text:Current Attempt in Progress The pretax financial income of Larkspur Company differs from its taxable income throughout each of 4 years as follows. Year 2020 2021 2022 2023 Pretax Financial Income $307,000 348,000 328,000 437,000 (a) Taxable Income Tax Rate $187,000 35 % 211,000 20 % 286.000 20 % 509,000 20 % Pretax financial income for each year includes a nondeductible expense of $32,000 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2020.
Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 20% was not enacted until the beginning of 2021. (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 O for the amounts) Date Account Titles and Explanation 2020 2021 Income Tax Expense (To record the adjustment for the decrease in the enacted tax rate.) Income Tax Payable Deferred Tax Liability 2021 2022 Income Tax Expense Deferred Tax Liability 2023 (In record in Income Tax Payable Show Transcribed Text Deferred Tax Liability (To record the adjustment for the decrease in the enacted tax rate) Income Tax Expense Income Tax Payable Deferred Tax Liability (To record income taxes for 2021.) Income Tax Expense Income Tax Payable Deferred Tax Liability Income Tax Expense Deferred Tax Liability Income Tax Payable 3 Ċ Debit 42200 100000 101800 Credit 65450 42200
Transcribed Image Text:Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 20% was not enacted until the beginning of 2021. (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 O for the amounts) Date Account Titles and Explanation 2020 2021 Income Tax Expense (To record the adjustment for the decrease in the enacted tax rate.) Income Tax Payable Deferred Tax Liability 2021 2022 Income Tax Expense Deferred Tax Liability 2023 (In record in Income Tax Payable Show Transcribed Text Deferred Tax Liability (To record the adjustment for the decrease in the enacted tax rate) Income Tax Expense Income Tax Payable Deferred Tax Liability (To record income taxes for 2021.) Income Tax Expense Income Tax Payable Deferred Tax Liability Income Tax Expense Deferred Tax Liability Income Tax Payable 3 Ċ Debit 42200 100000 101800 Credit 65450 42200
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