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Answers are provided in this question. Please help me understand the calculations because I don't understand how the answers were found, thank you. GTS Distributors
Answers are provided in this question. Please help me understand the calculations because I don't understand how the answers were found, thank you.
GTS Distributors purchased a delivery truck in January 2018 for $80,000 with no residual value. GTS uses straight-line depreciation over a five-year useful life for financial reporting purposes. For tax purposes, the depreciation equals 50% of cost in 2018, 45% in 2019, and 5in 2020 Pretax accounting income for 2020 was $300,000 which includes interest revenue of $45,000 from municipal bonds. The enacted tax rate is 40%. Assume there are no differences between accounting income and taxable income either now or in the future other than those described above On January 1, 2020. GTS had a balance in their Deferred Tax Asset account of S1000, a balance in their Deferred Tax Liability account of $11,200, and a $200 balance in their Valuation Allowance-DTA account. Prepare the journal entry to record income taxes in 2020. 2020 2021 2022 Pretax Acct Inc Premanent Diff Book Depr Tax Depi Timing Diff Tax Net Income 300,000 (45,000) 16,000 4,000 12,000 267,000 16,000 0 16,000 16,000 0 16,000 Tax Exp Allow DTA DTL Tax Pay 109,200 200 1000 1600 106,800Step by Step Solution
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