Solution:
Computation of Taxable Income and Income Tax Payable | ||||
Particulars | 2021 | 2022 | 2023 | 2024 |
Pretax accounting income | $360,000.00 | $280,000.00 | $350,000.00 | $390,000.00 |
Less: Income from installment sale property | -$32,000.00 | $0.00 | $0.00 | $0.00 |
Add: Collection of installment sales | $0.00 | $12,800.00 | $16,000.00 | $3,200.00 |
Less: Interest on municipal bonds | $0.00 | $0.00 | -$11,000.00 | $0.00 |
Taxable Income | $328,000.00 | $292,800.00 | $355,000.00 | $393,200.00 |
Income Tax Payable | $131,200.00 | $117,120.00 | $88,750.00 | $98,300.00 |
Computation of Deferred Tax | ||||
Particulars | 2021 | 2022 | 2023 | 2024 |
Collection of installment sale as per tax return | $0.00 | $12,800.00 | $16,000.00 | $3,200.00 |
Income from installment sales as per books | $32,000.00 | $0.00 | $0.00 | $0.00 |
Taxable Temporary differences | $32,000.00 | $0.00 | $0.00 | $0.00 |
Reversible Temporary differences | -$12,800.00 | -$16,000.00 | -$3,200.00 | |
Deferred tax liability | $12,800.00 | |||
Reversal
of Deferred tax liability 2022 = ($12,800*40% + $19,200*15%) 2023 - $16,000*25% 2024 - $3,200*25% |
$8,000.00 | $4,000.00 | $800.00 |
Journal Entries - Deville Company | |||
Year | Particulars | Debit | Credit |
2021 | Income Tax Expense Dr | $144,000.00 | |
To Income tax Payable | $131,200.00 | ||
To Deferred tax liability | $12,800.00 | ||
(To record income tax and deferred tax for 2021) | |||
2022 | Income Tax Expense Dr | $109,120.00 | |
Deferred tax liability Dr | $8,000.00 | ||
To Income tax Payable | $117,120.00 | ||
(To record income tax and deferred tax for 2022) | |||
2023 | Income Tax Expense Dr | $84,750.00 | |
Deferred tax liability Dr | $4,000.00 | ||
To Income tax Payable | $88,750.00 | ||
(To record income tax and deferred tax for 2023) | |||
2024 | Income Tax Expense Dr | $97,500.00 | |
Deferred tax liability Dr | $800.00 | ||
To Income tax Payable | $98,300.00 | ||
(To record income tax and deferred tax for 2024) |
The DeVile Company reported pretax accounting income on its income statement as follows: 2021 2022 2023...
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RECORD INCOME TAXES FOR 2022
AND AN ENTRY FOR 2023
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