Exercise 19-17 Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared 2014 Taxable income 2013 2015 Excess of revenues over expenses (excluding two temporary differences) Installment gross profit collected Expenditures for warranties $176,200 $218,500 $95,800 8,200 8,200 8,200 (5,200) (5,200) (5,200 ) $179,200 $221,500 $98,800 Taxable income Pretax financial income Excess of revenues over expenses (excluding two temporary differences) Installment gross profit earned Estimated cost of warranties 2013 2014 2015 $176,200 $218,500 $95,800 24,600 (15,600) -0 $185,200 $218,500 $95,800 Income before taxes The tax rates in effect are 2013, 4596; 2014 and 2015, 50%. All tax rates were enacted into law on January 1, 2013, No deferred income taxes existed at the beginning of 2013. Taxable income is expected in all future years Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013, 2014, and 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the journal entries for the years 2014-2016 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume that Jennings elects the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation 2014 (To record carryback.) To record carryforward.) 2015 2016 Prepare the portion of the income statement, starting with "Operating loss before income taxes," for 2014. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Jennings Inc. Income Statement (Partial) Year ended December 31, 2014 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXTLINK TO TEXT Prepare the portion of the income statement, starting with "Income before income taxes," for 2015. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Jennings Inc. Income Statement (Partial) Year ended December 31, 2015 Click if you would like to Show Work for this question: Open Show Work Exercise 19-17 Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared 2014 Taxable income 2013 2015 Excess of revenues over expenses (excluding two temporary differences) Installment gross profit collected Expenditures for warranties $176,200 $218,500 $95,800 8,200 8,200 8,200 (5,200) (5,200) (5,200 ) $179,200 $221,500 $98,800 Taxable income Pretax financial income Excess of revenues over expenses (excluding two temporary differences) Installment gross profit earned Estimated cost of warranties 2013 2014 2015 $176,200 $218,500 $95,800 24,600 (15,600) -0 $185,200 $218,500 $95,800 Income before taxes The tax rates in effect are 2013, 4596; 2014 and 2015, 50%. All tax rates were enacted into law on January 1, 2013, No deferred income taxes existed at the beginning of 2013. Taxable income is expected in all future years Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013, 2014, and 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the journal entries for the years 2014-2016 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryback and carryforward. Assume that Jennings elects the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation 2014 (To record carryback.) To record carryforward.) 2015 2016 Prepare the portion of the income statement, starting with "Operating loss before income taxes," for 2014. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Jennings Inc. Income Statement (Partial) Year ended December 31, 2014 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXTLINK TO TEXT Prepare the portion of the income statement, starting with "Income before income taxes," for 2015. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Jennings Inc. Income Statement (Partial) Year ended December 31, 2015 Click if you would like to Show Work for this question: Open Show Work
