Question
The following facts relate to Swifty Corporation. 1. Deferred tax liability, January 1, 2020, $30,900. 2. Deferred tax asset, January 1, 2020, $10,300. 3. Taxable
The following facts relate to Swifty Corporation.
1.
Deferred tax liability, January 1, 2020, $30,900.
2.
Deferred tax asset, January 1, 2020, $10,300.
3.
Taxable income for 2020, $108,150.
4.
Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $236,900.
5.
Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $97,850.
6.
Tax rate for all years,20%. No permanent differences exist.
7.
The company is expected to operate profitably in the future.
Compute the amount of pretax financial income for 2020.
Pretax financial income
$
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020.
Account Titles and Explanation
Debit
Credit
Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income taxes.
SwiftyCorporation
Income Statement (Partial)
December 31, 2020
For the Year Ended December 31, 2020
For the Quarter Ended December 31, 2020
Current
Deferred
Dividends
Expenses
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Retained Earnings, January 1
Retained Earnings, December 31
Revenues
Total Expenses
Total Revenues
$
Current
Deferred
Dividends
Expenses
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Retained Earnings, January 1
Retained Earnings, December 31
Revenues
Total Expenses
Total Revenues
Current
Deferred
Dividends
Expenses
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Retained Earnings, January 1
Retained Earnings, December 31
Revenues
Total Expenses
Total Revenues
$
Current
Deferred
Dividends
Expenses
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Retained Earnings, January 1
Retained Earnings, December 31
Revenues
Total Expenses
Total Revenues
Current
Deferred
Dividends
Expenses
Income before Income Taxes
Income Tax Expense
Net Income / (Loss)
Retained Earnings, January 1
Retained Earnings, December 31
Revenues
Total Expenses
Total Revenues
$
Compute the effective tax rate for 2020.
Effective tax rate
%
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Ethical Obligations and Decision Making in Accounting Text and Cases
Authors: Steven Mintz, Roselyn Morris
4th edition
978-1259543470, 1259543471, 978-1259730191
