Shaw Media Ltd prepares statements quarterly Part A Required 1
Shaw Media Ltd. prepares statements quarterly.
Part A:
1. Based on 2013 results, Shaw’s estimated tax liability for 2014 is $285,960. Shaw will accrue 1/12 of this amount at the end of each month (assume the installments are paid the next day). Prepare the entry on January 31, 2014, to accrue the tax liability and on February 1 to record the payment.
2. At year-end, December 31, the actual income tax for 2014 was determined to be $291,420. Prepare the adjusting entry on December 31 to record the accrual (assume 11 months have been accrued to date in 2014). Record the payment on January 1, 2015.

Part B:
3. Complete the following table assuming the company estimates its tax liability for the year 2014 to be $640,000.

4. Assuming that actual tax for the year 2014 was determined to be $652,000, prepare the appropriate adjusting entry at year-end to bring the balance in the Income Tax Expense account to the correct balance, assuming no accrual has yet been recorded for the fourth quarter.
5. Calculate the company’s actual net income for the year2014.
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