Question
For the year ended December 31, 2018, Southern Atlantic Distributors reported pretax accounting income of $975,000. Selected information for 2018 from Southern Atlantic Distributors records
For the year ended December 31, 2018, Southern Atlantic Distributors reported pretax accounting income of $975,000. Selected information for 2018 from Southern Atlantic Distributors records follows:
Interest income on municipal bonds (tax-free income) $35,000
Insurance expense representing 25% of a $180,000, $45,000 4-year insurance policy that was deducted for tax purposes in 2018 when it was purchased. The policy expires at the end of 2021.
Rental revenue reported in the income statement, which $75,000 does not include an additional $25,000 of advance payment for 2019 rent. Advance payments must be included in taxable income in the year received.
Southern Atlantics income tax rate is 40%. At January 1, 2018, Southern Atlantics records indicated balances of $5,000 and $14,000 in its deferred tax asset and deferred tax liability accounts, respectively. Prepare the journal entry to record Southern Atlantics income taxes for 2018.
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