Saved Help Save &Exit; Sub Check my work The DeVille Company reported pretax acc

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Saved Help Save &Exit; Sub Check my work The DeVille Company reported pretax accounting income on its income statement as follows: 2019 388,800 2828 2018 380,880 370,000 410,080 2821 Included in the income of 2018 was an installment sale of property in the amount of $40,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $16,000 in 2019, $20,000 in 2020, and $4.000 in 2021 Included in the 2020 income was $16,000 interest from investments in municipal bonds The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new/ tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond. Required Prepare the year-end journal entries to record income taxes for the years 2018-2021. (If no entry is required for a transection/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record 2018 income taxes K Prex 7 of 12 Next

Explanation / Answer

2018

Pretax accounting income $380,000

Deduct: Instalment revenue (40,000)

Add: Instalment collections -0-

Taxable income $340,000

Tax expense (plug) 105,000

Deferred tax liability (30% * 40,000) 12,000

Taxes payable (30% * 340,000) 102,000

2019

Pretax accounting income $300,000

Deduct: Instalment revenue (-0-)

Add: Instalment collections 16,000

Taxable income $316,000

Tax expense (plug) 79,500

Deferred tax liability (24,000 * 30%) 7,200

Taxes payable (30% * 316,000) 94,800

2020

Pretax accounting income $370,000

Deduct: Permanent difference (16,000)

Adjusted pretax accounting income $354,000

Deduct: Instalment revenue (0)

Add: Instalment collections 20,000

Taxable income $374,000

Tax expense (plug) 98,500

Deferred tax liability (25% x 20,000) 5,000

Taxes payable (25% x 350,000) 93,500

2021

Pretax accounting income $410,000

Deduct: Instalment revenue (0)

Add: Instalment collections 4,000

Taxable income $406,000

Tax expense (plug) 102,500

Deferred tax liability (25% * 4,000) 1,000

Taxes payable (25% * 406,000) 101,500

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