PWC Inc. earned income before taxes of $3,000,000 for the year ended December 31, 2020. During 2020, dividends received from taxable Canadian corporations were $20,000. Fines appear as an expense of $65,000 on the 2020 income statement. Charles used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $2,000,000 in 2020. For tax purposes, Charles claimed the maximum capital cost allowance of $1,120,000. Note: The asset was purchased at the start of 2019 for $5,000,000. The asset is a class 8 asset - CCA rate is 20%. (Hint: Use Accelerated Investment Incentive for 2019) PWC sold its products with a two-year warranty against manufacturing defects. In 2020, Leonard accrued $500,000 of warranty expenses: actual expenditures for 2020 were $120,000 with the remaining $380,000 anticipated in 2021. In 2020, PWC was subject to a 15% income tax rate. During the year, the federal government announced that tax rates would be increased to 18%, effective January 1, 2021. Required: Calculate income tax payable for 2020, prepare the equipment schedule, and prepare the journal entries to record current and deferred income taxes for 2020. Show all your calculations. Income Tax Calculation Journal Entries Accounts DR CR Equipment Schedule PWC Inc. earned income before taxes of $3,000,000 for the year ended December 31, 2020. During 2020, dividends received from taxable Canadian corporations were $20,000. Fines appear as an expense of $65,000 on the 2020 income statement. Charles used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $2,000,000 in 2020. For tax purposes, Charles claimed the maximum capital cost allowance of $1,120,000. Note: The asset was purchased at the start of 2019 for $5,000,000. The asset is a class 8 asset - CCA rate is 20%. (Hint: Use Accelerated Investment Incentive for 2019) PWC sold its products with a two-year warranty against manufacturing defects. In 2020, Leonard accrued $500,000 of warranty expenses: actual expenditures for 2020 were $120,000 with the remaining $380,000 anticipated in 2021. In 2020, PWC was subject to a 15% income tax rate. During the year, the federal government announced that tax rates would be increased to 18%, effective January 1, 2021. Required: Calculate income tax payable for 2020, prepare the equipment schedule, and prepare the journal entries to record current and deferred income taxes for 2020. Show all your calculations. Income Tax Calculation Journal Entries Accounts DR CR Equipment Schedule
