The following information is available for the first two years of operations for Bancroft, Inc Year 2020 2021 Earnings before Tax $850,000 Earning before Tax 900,000 On December 1, 2020, $90,000 was collected in advance for the rental of a building for a six month period December 1, 2020 May 31, 2021 The entire $90,000 was reported as taxable income in 2020 The company uses the accrual basis of accounting for financial statement purposes In 2020 Bancroft, Inc incurred a lawsuit that is probable and estimated at $60,000 It has been properly recorded as a litigation liability at 12 31 20 and will be paid in 2021 Bancroft, Inc purchased computer equipment in 2020 Depreciation for financial reporting purposes amounts to $70,000 each year for 2020 2022 The company is able to deduct the full cost under the IRS Code Section 179 $210,000 amount allowed for tax purposes in 2020 In 2020 the gross profit on the books was $370,000 For tax purposes, the company uses the installment method recording $130,000 in 2020 and will record $150,000 in 2021 and $90,000 in 2022 warranty expense accrued for financial reporting was $45,000 in 2020 Actual warranties paid and deducted on the tax returns was $10,000 in 2020 The remainder will be paid $15,000 in 2021 and $20,000 in 2022 Bancroft, Inc has life insurance policies on the chief executives The annual premiums paid are $40,000 per year and recorded as an expense each year as paid Bancroft, Inc earns interest on tax exempt state bonds in the amounts of $25,000 each year in 2020, 2021 and 2022 The enacted tax rates existing at December 31, 2020 are 30 for 2020 and 34 for 2021 and thereafter Instructions Complete the worksheet provided It includes the following i Prepare a reconciliation of Book Income to Taxable Income for 2020 ii Prepare a schedule of future taxable and (deductible) amounts at the end of 2020 iii Prepare a schedule of the deferred tax (asset) and liability at the end of 2020 iv Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2020 Show how the deferred income taxes should be reported on the Balance Sheet at December 31, 2020 Show how the taxes should be reported on the Income Statement at December 31, 2020 Repeat a to g above for 2021,2022,2023 show answer on Excel only I really need help, that's all i have so far Deferred Tax Worksheet Schedule of FTAs and FDAs by year asset liability 2020 2021 2022 Book Income 850,000 a Rental Income (30,000) b Litigation (60,000) c Depreciation (210,000) 140,000 70,000 d Installment Income 240,000 (150,000) 90,000 e Warranty 10,000 15,000 20,000 f Life Insurance (10,000) 15,000 20,000 g State Bond 25,000 25,000 25,000 30 34 34 Taxable Income Def Tax Asset Def Tax Liability 0 Record Tax Journal Entry 12 31 20 P L A C 0 TO PROVISION FOR TAX P L A C Deffred Tax Liaabilities Balance Sheet Income Statement

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Posted on Jul 13, 2024

The following information is available for the first two years of operations for Bancroft, Inc.:

Year 2020 2021

Earnings before Tax $850,000

Earning before Tax 900,000

On December 1, 2020, $90,000 was collected in advance for the rental of a building for a six-month period December 1, 2020 May 31, 2021. The entire $90,000 was reported as taxable income in 2020. The company uses the accrual basis of accounting for financial statement purposes.
In 2020 Bancroft, Inc. incurred a lawsuit that is probable and estimated at $60,000. It has been properly recorded as a litigation liability at 12/31/20 and will be paid in 2021.
Bancroft, Inc. purchased computer equipment in 2020. Depreciation for financial reporting purposes amounts to $70,000 each year for 2020-2022. The company is able to deduct the full cost under the IRS Code Section 179 $210,000 amount allowed for tax purposes in 2020.
In 2020 the gross profit on the books was $370,000. For tax purposes, the company uses the installment method recording $130,000 in 2020 and will record $150,000 in 2021 and $90,000 in 2022.
warranty expense accrued for financial reporting was $45,000 in 2020. Actual warranties paid and deducted on the tax returns was $10,000 in 2020. The remainder will be paid $15,000 in 2021 and $20,000 in 2022.
Bancroft, Inc. has life insurance policies on the chief executives. The annual premiums paid are $40,000 per year and recorded as an expense each year as paid.
Bancroft, Inc. earns interest on tax-exempt state bonds in the amounts of $25,000 each year in 2020, 2021 and 2022.

The enacted tax rates existing at December 31, 2020 are 30% for 2020 and 34% for 2021 and thereafter.

Instructions

Complete the worksheet provided. It includes the following. i. Prepare a reconciliation of Book Income to Taxable Income for 2020.

ii. Prepare a schedule of future taxable and (deductible) amounts at the end of 2020. iii. Prepare a schedule of the deferred tax (asset) and liability at the end of 2020. iv. Prepare the journal entry to record income tax expense, deferred income taxes,

and income tax payable for 2020.
Show how the deferred income taxes should be reported on the Balance Sheet at December

31, 2020.
Show how the taxes should be reported on the Income Statement at December 31, 2020.
Repeat a. to g. above for 2021,2022,2023
show answer on Excel only- I really need help, that's all i have so far.


	Deferred Tax Worksheet


			Schedule of FTAs and FDAs by year				asset/ liability
		2020	2021	2022			asset/ liability
	Book Income	850,000
a.	Rental Income	(30,000)
b.	Litigation		(60,000)
c.	Depreciation	(210,000)	140,000	70,000
d.	Installment Income	240,000	(150,000)	90,000
e.	Warranty	10,000	15,000	20,000
f.	Life Insurance	(10,000)	15,000	20,000
g.	State Bond	25,000	25,000	25,000
		30%	34%	34%
	Taxable Income	%







		Def. Tax Asset			Def. Tax Liability
						0





	Record Tax Journal Entry 12/31/20
	P/L A/C	0
	TO PROVISION FOR TAX
	P/L A/C
	Deffred. Tax Liaabilities

	Balance Sheet			Income Statement