Multiple tax rates • LO16–1, LO16–4, LO16–5 Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows: 2019 $150,000 30% 2020 250,000 40 2021 200,000 40 Pretax accounting income for 2018 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2018 is 30%. Required: 1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2018 income taxes. 2. What is Case’s 2018 net income?
Multiple tax rates • LO16–1, LO16–4, LO16–5 Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows: 2019 $150,000 30% 2020 250,000 40 2021 200,000 40 Pretax accounting income for 2018 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2018 is 30%. Required: 1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2018 income taxes. 2. What is Case’s 2018 net income?
Solution Summary: The author explains the calculation of income tax payable and deferred tax liability in the current year.
Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows:
2019
$150,000
30%
2020
250,000
40
2021
200,000
40
Pretax accounting income for 2018 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2018 is 30%.
Required:
1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2018 income taxes.
2. What is Case’s 2018 net income?
Definition Definition Items on the balance sheet that are created when the tax paid is less than the tax considered on the income statement. A deferred tax liability is recorded on the liability side of the balance sheet and is thus a tax burden. It increases the taxes owed in the future.
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Gillan company had beginning inventory of 100 units at $12 each. During the period, they purchased 200 units at $14 each and 300 units at $15 each. If they sold 400 units, calculate the ending inventory value using FIFO, LIFO, and weighted average methods.
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