Problem 2 (15 Marks)
The records for Kalman Ltd. show the following data for calendar 2023:
1. Gross profit on instalment sales recorded on the books was $100,000. Gross
profit from collections of instalment receivables was $50,000.
2. Golf club dues were $3,800.
3. Machinery was acquired in January 2023 for $300,000. Kalman uses
straight-line depreciation over a ten-year life (no residual value). For tax
purposes, Kalman uses CCA at 14% for 2023 after considering the half-year rule.
4. Dividends received from a Canadian corporation were $4,000.
5. The estimated warranty liability related to 2023 sales was $19,600. Warranty
repair costs paid during 2023 were $13,600. The remainder will be paid in 2024.
6. Pre-tax accounting income is $250,000. The enacted income tax rate is 25%.
Instructions:
a) Prepare a schedule (starting with pre-tax accounting income) to calculate taxable income.
b) Prepare the required adjusting entries to record income taxes for 2023.