Question
You are the bookkeeper of Lancaster Inc. and you have to prepare the tax return report for your manager by the end of this week.
You are the bookkeeper of Lancaster Inc. and you have to prepare the tax return report for your manager by the end of this week. While you were working on that you pointed out the following information that you think is important for the report preparation: the tax return reported a taxable income of 135000 in 2019 and 155,000 in 2020. You have reported a sale in 2019 total of 15000, this will be received in cash as follows; 5000$ in 2020, 5000$ in 2021 and 5000 in 2022. Tax is using installment base for this revenue excess book depreciation over tax depreciation in 2019 is 20,000, this will be reversed entirely in 2020. the company made a donation during 2019 total of 10,000. tax rate for all years is 30% assume that the company had no deferred taxes at 1.1.2019 The manager asked you to fill in the following information: 1 What is the pretax income for 2019 2 What is the pretax income for 2020 3 What is the income tax expense for 2019 4 What is the income tax expense for 2020 5 What is DTA balance on 31.12.2019 6 What is DTA balance on 31.12.2020 7 What is DTL balance on 31.12.2019 8 What is DTL balance on 31.12.2020 9 What is journal entry to be recorded in 2019 10 What is the journal entry to be recorded in 2020 11 How much is the deferred portion of income tax expense in 2019 (show + or to indicate whether it is added or deducted) 12 How much is the deferred portion of income tax expense in 2020 (show + or to indicate whether it is added or deducted)
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