The records for Ivanhoe Co. show this data for 2021: ● Gross profit on installment sales recorded on the books was $460,000. Gross profit from collections of installment receivables was $320,000. ● Life insurance on officers was $4,200. ● Machinery was acquired in January for $340,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Ivanhoe may deduct 14% for 2021. ● Interest received on tax exempt Iowa State bonds was $9,400. ● The estimated warranty liability related to 2021 sales was $22,000. Repair costs under warranties during 2021 were $14,000. The remainder will be incurred in 2022. ● Pretax financial income is $640,000. The tax rate is 20%. Prepare a schedule starting with pretax financial income and compute taxable income. Schedule of Pretax Financial Income and Taxable Income for 2021 $ $ Prepare the journal entry to record income taxes for 2021. Account Titles and Explanation Debit Credit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The records for Ivanhoe Co. show this data for 2021:

 

Gross profit on installment sales recorded on the books was $460,000. Gross profit from collections of installment receivables was $320,000.

 

Life insurance on officers was $4,200.

 

Machinery was acquired in January for $340,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Ivanhoe may deduct 14% for 2021.

 

Interest received on tax exempt Iowa State bonds was $9,400.

 

The estimated warranty liability related to 2021 sales was $22,000. Repair costs under warranties during 2021 were $14,000. The remainder will be incurred in 2022.

 

Pretax financial income is $640,000. The tax rate is 20%.

 
 

 

 

 

 

Prepare a schedule starting with pretax financial income and compute taxable income. 

Schedule of Pretax Financial Income
and Taxable Income for 2021

 

 

$

 

   

 

   

 

   
     

 

   

 

   

 

   

 

   

 

 

$

 
 

 

 

 

 

Prepare the journal entry to record income taxes for 2021. 

Account Titles and Explanation

Debit

Credit

     
     
     
     
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