Question
Indigo Company has the following two temporary differences between its income tax expense and income taxes payable. 2020 2021 2022 Pretax financial income $872,000 $875,000
Indigo Company has the following two temporary differences between its income tax expense and income taxes payable.
2020 | 2021 | 2022 | |||||||
Pretax financial income | $872,000 | $875,000 | $907,000 | ||||||
Excess depreciation expense on tax return | (29,900 | ) | (40,100 | ) | (10,100 | ) | |||
Excess warranty expense in financial income | 19,800 | 10,200 | 8,400 | ||||||
Taxable income | $861,900 | $845,100 | $905,300 |
The income tax rate for all years is 20%.
Indicate how deferred taxes will be reported on the 2022 balance sheet. Indigos product warranty is for 12 months.
Assuming there were no temporary differences prior to 2020, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020, 2021, and 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Income Tax Expense 174400 Deferred Tax Asset 3960 Income Tax Payable 172380 Deferred Tax Liability 5980 2021 Income Tax Expense 175000 Deferred Tax Asset 2040 Income Tax Payable 169020 Deferred Tax Liability 8020 2022 Income Tax Expense 181400 Deferred Tax Asset 1680 Income Tax Payable 181060 Deferred Tax Liability 2020 Indicate how deferred taxes will be reported on the 2022 balance sheet. Indigo's product warranty is for 12 months. Indigo Company Balance Sheet (Partial) $ e Textbook and Media List of Accounts Prepare the income tax expense section of the income statement for 2022, beginning with the line "Pretax financial income." (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses eg. (45).) Indigo Company Income Statement (Partial)Step by Step Solution
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