Question

The accounting records of Marin Inc. show the following data for 2017 (its first year of operations). 1. Life insurance expense on officers was $8,100. 2. Equipment was acquired in early January for $315,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Marin used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $4,200. 4. Product warranties were estimated to be $53,100 in 2017. Actual repair and labor costs related to the warranties in 2017 were $9,800. The remainder is estimated to be paid evenly in 2018 and 2019. 5. Gross profit on an accrual basis was $103,000. For tax purposes, $77,000 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,800. 7. Pretax financial income was $811,900. The tax rate is 30%.

Answer 1

Workin gnote
Depreciation expense	-31500	X	30	%	=	-9450	DTL
Installment sales	-26000	X	30	%	=	-7800	DTL
Warranty expense	43300	X	30	%	=	12990	DTA

Account Tittle	Debit	credit
Income Tax Expense	$246,180.00
Deferred Tax Asset	$12,990.00
Deferred Tax Liability (9450+7800)		$17,250.00
Income Tax Payable (806400*30%)		$241,920.00