Question

Blue Spruce Ltd. made four quarterly payments of $3,500 each to the Receiver General for Canada during 2020 as instalment payments on its estimated 2020 corporate tax liability. At year end, Blue Spruce’s controller completed the company’s 2020 tax return, which showed income tax owing of $28,500 on its 2020 income. (a) Prepare the summary entry for the quarterly tax instalments and the year-end adjusting entry to recognize the 2020 income tax. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(b) Identify any year-end statement of financial position (SFP) amount that is related to income tax and indicate how it should be classified. At year end, the company would report of $ ________in .

Answer 1

Date	Accounts title	Debit	Credit
(a)	Income tax advance (tax credit receivable)	14,000
	Cash		14,000
	To record summary entry for the quarterly tax instalments. (3500*4)
(b)	Income tax expense	28,500
	Income tax advance (tax credit receivable)		14,000
	Income tax payable (28500-14000)		14,500
	To record income tax expense

Part B

Company would report of $ 14,500 as income tax payable on the statement of financial position.