Shaddick Corp. began its 2014 fiscal year with a debit balance of $11,250 in its Income Tax Receivable account. During the year, the company made quarterly income tax installment payments of $8,100 each. In early June, a cheque was received from the for Shaddick's overpayment of 2013 taxes. The refunded amount was exactly as Shaddick had calculated it would be on its 2013 income tax return. On completion of the 2014 income tax return, it was determined that Shaddick's income tax based on 2014 income was $37,800.
Instructions
(a) Prepare all journal entries that are necessary to record the 2014 transactions and events.
(b) Indicate how the income tax will be reported on Shaddick's December 31, 2014 statement of financial position.
(c) Assume that the cheque from the CRA in early June is for $2,750. The difference arose because of calculation errors on Shaddick's tax return. How would the difference be accounted for and where would it be shown on Shaddick's financial statements?