Accounting Problem 7

Com plete Part 1, Part 2 and Part 3

Note: For Part 2 and Part 3, use the List of Accounts Below

List of Accounts

• Allowance to Reduce Deferred Tax Asset to Expected Realizable Value
• Allowance to Reduce Future Tax Asset to Expected Realizable Value
• Current Tax Benefit
• Current Tax Benefit - Discontinued Operations
• Current Tax Expense
• Current Tax Expense - Discontinued Operations
• Current Tax Payable
• Deferred Tax Asset
• Deferred Tax Benefit
• Deferred Tax Benefit - Discontinued Operations
• Deferred Tax Benefit-OCI
• Deferred Tax Expense
• Deferred Tax Expense - Discontinued Operations
• Deferred Tax Expense-OCI
• Deferred Tax Liability
• FV-NI Investments
• FV-OCI Investments
• Future Tax Asset
• Future Tax Benefit
• Future Tax Expense
• Future Tax Liability
• Income Tax Payable
• Income Tax Receivable
• Investment Income or Loss
• Land
• No Entry
• Retained Earnings
• Unrealized Gain or Loss
• Unrealized Gain or Loss-OCI

Part 1

Bridgeport Corporation purchased equipment very late in 2020. Based on generous capital cost allowance rates provided in the Income Tax Act, Bridgeport Corporation claimed CCA on its 2020 tax return but did not record any depreciation because the equipment was being tested. This temporary difference will reverse and cause taxable amounts of $25,200 in 2021, $35,900 in 2022, and $48,900 in 2023. Bridgeport's accounting income for 2020 is $242,000 and the tax rate is 30% for all years. There are no deferred tax accounts at the beginning of 2020. Calculate the deferred tax balance at December 31, 2020. Deferred tax eTextbook and Media List of Accounts Calculate taxable income and income tax payable for 2020. Taxable income $ Income tax payablePrepare the journal entries to record income taxes for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Year Account Titles and Explanation Debit Credit 2020 (To record current tax expense) 2020 (To record deferred tax expense)Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income tax." Bridgeport Corporation (Partial) Income Statement v $