Question
During 2020, Culver Co.s first year of operations, the company reports pretax financial income at $253,400. Culvers enacted tax rate is 45% for 2020 and
During 2020, Culver Co.s first year of operations, the company reports pretax financial income at $253,400. Culvers enacted tax rate is 45% for 2020 and 20% for all later years. Culver expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows.
Future Years | |||||||||||||||
2021 | 2022 | 2023 | 2024 | 2025 | Total | ||||||||||
Future taxable (deductible) amounts: | |||||||||||||||
Installment sales | $31,700 | $31,700 | $31,700 | $95,100 | |||||||||||
Depreciation | 6,300 | 6,300 | 6,300 | $6,300 | $6,300 | 31,500 | |||||||||
Unearned rent | (54,200 | ) | (54,200 | ) | (108,400 | ) |
Complete the schedule below to compute deferred taxes at December 31, 2020.
Deferred Tax | ||||||||||
Temporary Difference | Future Taxable (Deductible) Amounts | Tax Rate | (Asset) | Liability | ||||||
Installment sales | $95,100 | % | $ | $ | ||||||
Depreciation | 31,500 | % | $ | $ | ||||||
Unearned rent | (108,400) |
| % | $ | ||||||
Totals | $ | $ | $ |
Compute taxable income for 2020.
Taxable income for 2020 | $ |
Prepare the journal entry to record income taxes payable, deferred taxes, and income tax expense for 2020.
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