Gretta Corp. was formed in 2019. Accounting and tax information for its first three years of operations
Question:
Gretta Corp. was formed in 2019. Accounting and tax information for its first three years of operations follows:
The change in tax rates was not enacted until the year of the tax change. That is to say that in 2019, Gretta Corp. did not know that the tax rate in 2020 would be 40%; in 2020, it did not know that the tax rate in 2021 would be 35%.
Required:
Prepare all journal entries related to income taxes for Gretta Corp. from 2019 to 2021.
Accounting income before taxes Tax rate Dividend income from Canadian corporations Depreciation on PPE-original cost $250,000 Capital cost allowance Pension expense Payments to pension trustee Warranty expense Warranty costs 2019 $150,000 30% 3,000 25,000 50,000 25,000 20,000 6,000 4,000 2020 $225,000 40% 2,000 25,000 40,000 18,000 20,000 5,000 3,000 2021 $310,000 35% 4,000 25,000 30,000 22,000 20,000 4,000 5,000
Step by Step Answer:
To prepare the journal entries for Gretta Corps income taxes for the years 20192021 we will need to calculate the income tax expense and income tax pa...View the full answer
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A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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