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Recording Multiple Temporary Differences, Multiple Tax Rates Aim Inc. had the following activity for the years 2020-2022. Prepaid maintenance contract: $42,000 on January 1, 2020,
Recording Multiple Temporary Differences, Multiple Tax Rates Aim Inc. had the following activity for the years 2020-2022. Prepaid maintenance contract: $42,000 on January 1, 2020, for a three-year period beginning January 1, 2020. Deferred revenue: $63,000 on January 1, 2020, for a three-year period beginning January 1, 2020. Pretax GAAP income is $700,000, $543,200, and $595,000 for the years 2020, 2021, and 2022, respectively. Enacted tax rates are 2596 for years 2020 and 2021, and 30% for the year 2022. There were no balances in the deferred tax accounts on January 1, 2020. Required a. Compute the increase to income tax payable on December 31, 2020, 2021, and 2022. Dec. 31, 2020 Dec 31, 2021 Dec. 31, 2022 Income tax payable increase $ 14.000 x $ 1,750 x $ 2,100 X b. Prepare schedules to compute deferred tax accounts on December 31, 2020. Note: Do not use negative signs with your answers. Prepaid Expense Reversal of difference between GAAP and tax bases $ Tax rate 2021 14,000 $ 250 3,500 $ 2022 14,000 $ 30 Total 28.000 Deferred tax liability $ 4,200 $ 7,700 Deferred Revenue Reversal of difference between GAAP and tax bases $ Tax rate Deferred tax asset $ $ 2021 21,000 $ 25 % Total 42.000 2022 21,000 $ 30 6,300 $ 5,250 $ 11,550 c. Prepare the journal entry to record income taxes in the following years: 2020, 2021, and 2022. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. Dr. Cr. - 0 Date Account Name Dec 31, 2020 Deferred Tax Asset Income Tax Expense Deferred Tax Liability Income Tax Payable OX 0 OX 178,500 3.500 135.800 0 Dec 31, 2021 Deferred Tax Liability Income Tax Expense Deferred Tax Asset Income Tax Payable 0 5,250 134,050 OX . Dec 31, 2022 Deferred Tax Liability Income Tax Expense Deferred Tax Asset Income Tax Payable OX 176,400
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