Question
The records for Seahawks Inc. show the following data for calendar 2020: 1. Golf club dues were $ 3,800. 2. Machinery was acquired in January
The records for Seahawks Inc. show the following data for calendar 2020:
1. Golf club dues were $ 3,800.
2. Machinery was acquired in January 2020 for $ 300,000. Seahawks uses straight-line depreciation over a ten-year life (no residual value). For tax purposes, Seahawks uses CCA at 14% for 2020.
3. Dividends received from a Canadian corporation were $ 4,000.
4. The estimated warranty liability related to 2020 sales was $ 19,600. Warranty repair costs paid during 2020 were $ 13,600. The remainder will be paid in 2021.
5. Seahawks expensed $2,500 on fines related to late filing of the HST.
6. Pre-tax accounting income is $ 250,000. The enacted income tax rate is 25%.
Instructions
a) Prepare a schedule (starting with pre-tax accounting income) to calculate taxable income.
b) Prepare the required adjusting journal entries to record income taxes for 2020.
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