Need assistance with Q9, details please! Chapter 19 Income Taxes 09. Computation

Question

Need assistance with Q9, details please!
Chapter 19 Income Taxes 09. Computation of taxable income. The records for Bosch Co. show this data for 2015: Gross profit on installment sales recorded on the books was $420,000. Gross profit from collections of installment receivables was $280,000 Life insurance premium expense was $3,800. Machinery was acquired in January for $300,000. Straight-line depreciation over a ten- year life (no salvage value) is used for books. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2015. .Bosch Co was fined by the State Department $259,000 for improper exporting. . The estimated warranty liability related to 2015 sales was $21,600. Repair costs under warranties during 2015 were $13,600. The remainder will be incurred in 2016 Pretax financial income is $600,000. The tax rate is 30%. Instructions (a) Prepare a schedule comparing book income to IRS income. (b) Prepare the journal entry to record income taxes for 2015.

Explanation / Answer

ans a Pre tax Financila Income $600,000 Less: permanent Difference Life Insurance 3800 Fine 259000 Temporary Difference Installment sales (420000-280000) -140000 Extra depreciation ($42000-30000) -12000 warranties (21600-13600) 8000 Taxable Income $718,800 Extra depreciation ($42000-30000) SLM 300000/10 30000 MACRS 300000*14% 420000 Ans b Dr CR Income Tax Expense (215640+45600-2400) $258,840 Deffered tax Asset (30%*8000) 2400 Deferred tax liability (140000+12000)*30% 45600 Income Tax Payable (718800*30%) $215,640.0 (Being income tax expense recorded)

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