The Block Company uses the accrual basis to account for all sales transactions. Total sales for the

Question:

The Block Company uses the accrual basis to account for all sales transactions. Total sales for the current year amounted to $ 450,000. Of this amount, $ 120,000 is from sales on installment. The firm used the installment method ( i. e., cash basis) to account for the installment sale for tax purposes. Operating expenses are $ 180,000 for both and tax reporting.
a. What is the book basis of the installment sales receivable?
b. What is the tax basis of the installment sales receivable?
c. Assuming a 40% tax rate, compute income tax payable, the deferred tax provision, and income tax expense for the current year.
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...