Comprehensive Income Total Impact on NI Realized Gain/Loss Unrealized Gain/Loss
ID: 2536564 • Letter: C
Question
Comprehensive Income
Total Impact on NI
Realized Gain/Loss
Unrealized Gain/Loss
Total Impact on CI
Section III - Income Taxes (45 points)
- XYZ began business on 1/1/18. During that year, they had pre-tax financial accounting income of$96,000 and paid $800 of officer life insurance (company is the beneficiary). The accountant has determined that a truck purchased in 2018 for $25,000 will be depreciated as follows:
2018 2019 2020 2021 2022
Financial Statement $5,000 $5,000 $5,000 5,000 5,000 Tax Return $9,000 $7,000 $4,000 $ 3,000 2,000
Prepare the journal entry to record income taxes for 2018. Assume that the tax rate for 2018 and beyond is 40%.
- In 2019, XYZ had a financial accounting income of 360,000, which includes $800 of municipal income which is not taxable. In addition to the depreciation differences discussed above, the pre-tax income also includes an unrealized holding loss of $25,000 that cannot be deducted for tax purposes until the security is sold. All securities are held in a trading portfolio.
Prepare the journal entries to record income taxes for 2019. Assume that the tax rate for 2019 and beyond remains at 40%.
- In 2020, XYZ had a financial accounting income of $500,000.. In addition to the depreciationdifference discussed in 2018, $9,000 of the security loss recorded in 2019 was realized in 2020 when some of the securities were sold. Also, in 2020 XYZ adopted the installment sales method for tax purposes and $22,000 of profit recognized in 2020 will be taxable in a future year when the related receivables are collected.
Pre pare the journal entries to record income taxes for 2020. Assume that the tax rate for 2020 has been changed, effective 1/1/2020 to 30% and that the new rate is expected to remain in effect for all future years.
Comprehensive Income
Total Impact on NI
Realized Gain/Loss
Unrealized Gain/Loss
Total Impact on CI
Explanation / Answer
In 2020 I have passed multiple deferred tax entry for each item for better understanding. But we can also pass consolidated entry as below:
Dear Student,
Best effort has been made to give quality and correct answer. But if you find any issues please comment your concern. I will definitely resolve your query.
Also please give your positive rating.
2018 2019 2020 Pre Tax income 96,000.00 360,000.00 500,000.00 Depreciation (4,000.00) (2,000.00) 1,000.00 Municipal Bond interest (800.00) Unrealised Holding loss 25,000.00 (9,000.00) Installment Sales (22,000.00) Taxable Income 92,000.00 382,200.00 470,000.00 Tax Rate 40% 40% 30% Tax 36,800.00 152,880.00 141,000.00Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.