Question
Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes
Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 20152018 are as follows: |
Service Revenue | Collections | Pretax Accounting Income | |||||||
2015 | $ | 602,000 | $ | 572,000 | $ | 130,000 | |||
2016 | 690,000 | 700,000 | 195,000 | ||||||
2017 | 655,000 | 625,000 | 165,000 | ||||||
2018 | 640,000 | 660,000 | 145,000 | ||||||
|
There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%. |
(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 20152018.) |
Required: |
1. | Prepare the appropriate journal entry to record Alsup's 2016 income taxes, Alsups 2017 income taxes and Alsups 2018 income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.) |
Answer is not complete. No Event General Journal Debit Credit 78,000 Income tax expense Deferred tax liability Income tax payable 4,000 74,000 Income tax expense Deferred tax liability 000 000 000 66,000 12,000 Income tax payable 78,000 X 58.000 x Income tax expense Deferred tax liability Income tax payable 8,000 50,000
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