Question

Allmond Corporation, organized on January 3, 2021, had pretax accounting Income of $16 million and taxable income of $22 million for the year ended December 31, 2021. The 2021 tax rate is 25%. The only difference between accounting Income and taxable income is estimated product warranty costs. Assume that expected payments and scheduled tax rates (based on recently enacted tax legislation) are as follows: 2022 2023 2024 2025 $1 million 2 million 2 million 1 million 30% 3e% 20% Required: 1. Determine the amounts necessary to record Allmond's Income taxes for 2021 and prepare the appropriate journal entry. 2. What Is Allmond's 2021 net Income? Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 G Required 2 Determine the amounts necessary to record Allmond's income taxes for 2021. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Enter all amounts as positive values.) Tax Rate % Tax $ Recorded as: ($ in millions) $ 16.0 Pretax accounting income Warranty costs reversing in: 2022 2023 2024 2025 Total deferred tax amount Income taxable in current year < Required 1 Calculation Required 1 GJ >

Answer 1

	in millions`	Tax rate	Tax	Recorded as
Pretax accounting income	$16
Warranty cost
2022	$1	30%	$0.30	Deferred Tax asset
2023	2	30%	$0.60	Deferred Tax asset
2024	$2	30%	$0.60	Deferred Tax asset
2025	1	20%	$0.20	Deferred Tax asset
Total deferred tax amount	$6		$1.70	Deferred Tax asset
Income tax n current year	$22	35%	$7.70	Taxes payable
Accounts Title	Dr	Cr
Income tax expense	$6.00
Deferred Tax asset	$1.70
Income taxes payable		$7.70
Ans 2
Pretax accounting income	$16
Less: tax expense	$6.00
Net Income	$10.00
If any doubt please comment