Alsup Consulting sometimes performs services for which it receives payment at th

Question

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2015-2018 are as follows: Service Revenue 2015 $602,000 2016 690,000 2017 655,000 2018 640,000 Collections $572,000 700,000 625,000 660,000 Pretax Accounting Income $130,000 195,000 165,000 145,000 There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40% (Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2015-2018.) Required 1. Prepare the appropriate journal entry to record Alsup's 2016 income taxes, Alsup's 2017 income taxes and Alsup's 2018 income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.) View transaction list Journal entry worksheet 2 Record 2016 income taxes Note: Enter debits before credits Event General Journal Debit Credit ncome tax expense ferred tax liability ncome tax payable

Explanation / Answer

Record 2016 income taxes

Calculation:-

Record 2017 income tax

Calculation:-

Record 2018 income taxes

Calculation:-

Event General Journal Debit Credit 1 Income tax expense $78,000 Deferred tax liability (10,000 ×40%) $4000 Income tax payable ($205,000× 40%) $82,000

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