Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The accounting records of Pina Inc. show the following data for 2020 (its first year of operations). 1. Life insurance expense on officers was $
The accounting records of Pina Inc. show the following data for 2020 (its first year of operations). 1. Life insurance expense on officers was $ 8,100. 2. Equipment was acquired in early January for $329,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Pina used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,800. 4. Product warranties were estimated to be $ 48,400 in 2020. Actual repair and labor costs related to the warranties in 2020 were $ 9,700. The remainder is estimated to be paid evenly in 2021 and 2022. 5. Gross profit on an accrual basis was $ 92,000. For tax purposes, $ 77,500 was recorded on the installment- sales method. 6. Fines incurred for pollution violations were $ 4,400. 7. Pretax financial income was $ 750,500. The tax rate is 30%. Your answer is partially correct. Prepare a schedule starting with pretax financial income in 2020 and ending with taxable income in 2020. Schedule of Pretax Financial Income and Taxable Income for 2020 Pretax financial income $ 811900 Permanent differences Bond Interest Revenue 4200 Pollution Fines 4800 Insurance Expense 8100 820600 Temporary differences Depreciation Expense 31500 Installment Sales 26000 Warranty Expense 43300 Taxable income 806400 Prepare the journal entry for 2020 to record income taxes payable, income tax expense, and deferred income taxes. (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 O for the amounts.) Account Titles and Explanation Debit Credit Income Tax Expense Income Tax Payable Deferred Tax Liability no
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