Can I get some help on Part 1?
Problem 1 [TTD-AR] ABC's tax accounting methods and GAAP accounting methods are the same except for the method used to account for earned but uncollected service revenues. Per GAAP, ABC accrues these revenues (debit accounts receivable, credit sales revenue). Per tax rules, ABC is taxed on these revenues when the customer pays on account. In other words, services revenues are recognized on the accrual basis for GAAP and the cash basis for tax. ABC reports pretax GAAP earnings of $100,000 for the 12 months ended December 31, 2020. ABC's accounts receivable (relating to accrued service revenues) was $20,000 at December 31, 2019 and $30,000 at December 31, 2020. Embedded in pretax GAAP earnings is interest revenue of $2,000 earned on bonds issued by the State of Texas. Required 1. Prepare the entries needed to record current and deferred income taxes at December 31, 2020. Assume a 21% corporate tax rate. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Account Debit Credit 1 1 1 1 1 1 Enter your answer to the following question in the green box What amount of net income will be reported on the 2020 income statement? 3 2. Redo #1 assuming that a new tax law passed during 2020 changed income tax rates to 25% for fiscal years beginning on or after January 1, 2021. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Account Debit Credit 2 Enter your answer to the following question in the green box What amount of net income will be reported on the 2020 income statement? 4 Column1 A B c D E F Column1 Deferred income tax asset (Bal. Sht) Deferred income tax asset valuation allowance (Bal. Sht) Deferred income tax liability (Bal.Sht) Income tax payable (Bal.Sht) Liability for uncertain tax position (Bal. Sht) Income tax expense (Inc. Stmt) Problem 1 [TTD-AR] ABC's tax accounting methods and GAAP accounting methods are the same except for the method used to account for earned but uncollected service revenues. Per GAAP, ABC accrues these revenues (debit accounts receivable, credit sales revenue). Per tax rules, ABC is taxed on these revenues when the customer pays on account. In other words, services revenues are recognized on the accrual basis for GAAP and the cash basis for tax. ABC reports pretax GAAP earnings of $100,000 for the 12 months ended December 31, 2020. ABC's accounts receivable (relating to accrued service revenues) was $20,000 at December 31, 2019 and $30,000 at December 31, 2020. Embedded in pretax GAAP earnings is interest revenue of $2,000 earned on bonds issued by the State of Texas. Required 1. Prepare the entries needed to record current and deferred income taxes at December 31, 2020. Assume a 21% corporate tax rate. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Account Debit Credit 1 1 1 1 1 1 Enter your answer to the following question in the green box What amount of net income will be reported on the 2020 income statement? 3 2. Redo #1 assuming that a new tax law passed during 2020 changed income tax rates to 25% for fiscal years beginning on or after January 1, 2021. Enter your entries below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in the green box. Account Debit Credit 2 Enter your answer to the following question in the green box What amount of net income will be reported on the 2020 income statement? 4 Column1 A B c D E F Column1 Deferred income tax asset (Bal. Sht) Deferred income tax asset valuation allowance (Bal. Sht) Deferred income tax liability (Bal.Sht) Income tax payable (Bal.Sht) Liability for uncertain tax position (Bal. Sht) Income tax expense (Inc. Stmt)
