Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up
Question:
Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017-2020 are as follows:
Service Revenue Collections Pretax Accounting Income
2017......................$650,000.........$620,000...........................$186,000
2018........................750,000...........770,000.............................250,000
2019........................715,000...........700,000.............................220,000
2020........................700,000...........720,000.............................200,000
There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%.
Required:
1. Prepare the appropriate journal entry to record Alsup's 2018 income taxes.
2. Prepare the appropriate journal entry to record Alsup's 2019 income taxes.
3. Prepare the appropriate journal entry to record Alsup's 2020 income taxes.
Step by Step Answer:
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas