Accounting for Income Taxes The following information is available for Angelica Corporation for 2023: 1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $207,000. The differences will reverse equally over the years 20242026. 2. Annual interest received on municipal bonds was $18,000 in 2023 and $20,000 in 2024. 3. Rent collected in advance on November 1,2023 , totaled $117,000 for a 3 -year period. Rent was recognized monthly, starting on November 1,2023 for book purposes. 4. During 2023 and 2024, Angelica paid $25,000 (each year) for a life insurance policy on its executives, with Angelica as the beneficiary. In 2024, Angelica received $280,000 due to the untimely passing of its CFO. 5. The tax rates are 20% for 2023 and 2024 , and 30% for 2025 and beyond. 6. A contingent loss due to litigation was accrued in 2023 for $295,000. The company expects to pay the loss in 2025. 7. Pretax financial income for the year ended December 31,2023 was $6,125,000, and $6,595,000 for the year ended December 31,2024. 8. The company has a $5,800 credit balance in the Valuation Allowance and a beginning balance of $17,000 in the DTA account due to a temporary difference of $85,000 caused by a deferred revenues for GAAP purposes. The difference was realized for tax purposes in 2023. 9. Of the ending balance of the DTA account, the company believes that it is "more likely than not" that 9% will not be realized. $150,000. At the end of 2023 , the fair value of the security was $153,000. The security was sold on Febuary 3, 2024, for $156,000. Instructions Assuming no other differences between book and taxable incomes existed, except for those mentioned above, prepare the year end income tax journal entries to record Income Tax Expense, Deferred Tax Asset/Liability, Income Taxes Payable and Valuation Allowance for 2024 (separate the valuation allowance journal entry from the income tax expense journal entry). Accounting for Income Taxes The following information is available for Angelica Corporation for 2023: 1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $207,000. The differences will reverse equally over the years 20242026. 2. Annual interest received on municipal bonds was $18,000 in 2023 and $20,000 in 2024. 3. Rent collected in advance on November 1,2023 , totaled $117,000 for a 3 -year period. Rent was recognized monthly, starting on November 1,2023 for book purposes. 4. During 2023 and 2024, Angelica paid $25,000 (each year) for a life insurance policy on its executives, with Angelica as the beneficiary. In 2024, Angelica received $280,000 due to the untimely passing of its CFO. 5. The tax rates are 20% for 2023 and 2024 , and 30% for 2025 and beyond. 6. A contingent loss due to litigation was accrued in 2023 for $295,000. The company expects to pay the loss in 2025. 7. Pretax financial income for the year ended December 31,2023 was $6,125,000, and $6,595,000 for the year ended December 31,2024. 8. The company has a $5,800 credit balance in the Valuation Allowance and a beginning balance of $17,000 in the DTA account due to a temporary difference of $85,000 caused by a deferred revenues for GAAP purposes. The difference was realized for tax purposes in 2023. 9. Of the ending balance of the DTA account, the company believes that it is "more likely than not" that 9% will not be realized. $150,000. At the end of 2023 , the fair value of the security was $153,000. The security was sold on Febuary 3, 2024, for $156,000. Instructions Assuming no other differences between book and taxable incomes existed, except for those mentioned above, prepare the year end income tax journal entries to record Income Tax Expense, Deferred Tax Asset/Liability, Income Taxes Payable and Valuation Allowance for 2024 (separate the valuation allowance journal entry from the income tax expense journal entry)
