Question
Bateman Light began operations in 20X1. The company sometimes sells used warehouses on an installment basis. In those cases, Bateman Light reports income in its
Bateman Light began operations in 20X1. The company sometimes sells used warehouses on an installment basis. In those cases, Bateman Light reports income in its income statement in the year of the sale, In its income tax return, though Bateman Light reports installmetn income by the installment method. Installment method. Installment income in 20X1 wass $90,000 which Bateman Light expects to collect equally over the next three years (20X2, 20X3, and 20X4). The tax rate is 22% but based on an enacted law, is scheduled to become 25% in 20X3.
Bateman Light's pretax accounting income from the 20X1 income statement was $830,000, which includes $40,000 of interest revenue from an incestment in municipal bonds. There were no differences between accounting income and taxable income other than those descrived above.
Bateman Light's pretax accoutning income from the 20x2 income statement was $900,000.
Required: Calculate taxable income for 20X1 and 20X2.
Prepare appropriate journal entries for 20X1 and 20X2.
Calculate net income (after taxes) for 20X1 and 20X2.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started