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For its first year if operations, Altitude Inc. reports pretax GAAP income of $100,000 in 2020. Assume pretax income in 2021 and 2022 of $125,000
For its first year if operations, Altitude Inc. reports pretax GAAP income of $100,000 in 2020. Assume pretax income in 2021 and 2022 of $125,000 and $90,000 respectively. The enacted income tax rate in all years is 25%. The following additional information is available for the first three years of operation (with the exception of the one item in the 4th year).
- Prepaid rent in the amount of $20,000 was recorded on December 21, 2020, for 2021 rent.
- A warranty accrual of 30,000 was recorded on December 31, 2020. The warranty was paid evenly over the years 2021-2023.
- The company recorded interest revenue of $500 each of the three years on municipal bonds.
- Compute the income tax payable each year for 202, 2021, 2022
- Determined the balance of any deferred tax assets or deferred tax liabilities at the end of each year (2020, 2021, 2022)
- Record the journal entry related to taxes in 2020, 2021, 20222
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