Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Whispering Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,726,000 for the year ended December 31, 2023. During 2023 ,

image text in transcribedimage text in transcribedimage text in transcribed

Whispering Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,726,000 for the year ended December 31, 2023. During 2023 , Whispering paid $208,000 for meals and entertainment expenses. In 2020, Whispering's tax accountant made a mistake when preparing the company's income tax return. In 2023, Whispering paid $18,000 in penalties related to this error. These penalties were not deductible for tax purposes. Whispering owned a warehouse building for which it had no current use, so the company chose to use the building as a rental property. At the beginning of 2023 , Whispering rented the building to SPK Inc. for two years at $259,000 per year. SPK paid the entire two years' rent in advance. Whispering used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $400,000. For tax purposes, Whispering claimed the maximum capital cost allowance of $625,000. Whispering began to sell its products with a two-year warranty against manufacturing defects in 2023 to match a warranty introduced by its main competitor. In 2023 , Whispering accrued $588,000 of warranty expenses: actual expenditures for 2023 were $278,000 with the remaining $310,000 anticipated in 2024 . In 2023, Whispering was subject to a 35% income tax rate. During the year, the federal government announced that tax rates would be decreased to 33\% for all future years beginning January 1, 2024. Calculate the amount of any permanent differences for 2023. Prepare the journal entries to record current and future income taxes for 2023

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Auditor Guide Theory And Application Made Easy

Authors: Warren Alford

1st Edition

1453899774, 978-1453899779

More Books

Students also viewed these Accounting questions