Question: Continue with the results of Problem 39 Prepare the GAAP

Continue with the results of Problem 39. Prepare the GAAP journal entries for Willingham’s income tax expense.
In problem Willingham, Inc., an accrual basis C corporation, reports pretax book income of $1.6 million. At the beginning of the tax year, Willingham reported no deferred tax accounts on its balance sheet. It is subject to a 35% U.S. income tax rate in the current year and for the foreseeable future.
Willingham’s book-tax differences include the following. Compute the entity’s current and deferred income tax expense for the year.
Addition to the book reserve for uncollectible receivables (no specific
write-offs occurred) ...................... $4,000,000
Tax depreciation in excess of book ............... 3,000,000
Book gain from installment sale of nonbusiness asset, deferred for tax.. 2,000,000
Interest income from school district bonds ............ 200,000

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  • CreatedMay 25, 2015
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