Calculate the Interim Provision for Q2 and show the journal entry. For simplicity, assume no entry was previously recorded for the first quarter. Additional facts:

Statutory tax rate for County A is 21%.

Statutory tax rate for Country B is 15%

A tax law was enacted in Q1 that would allow the company to claim a tax credit of $500 for the previous year.

There was an event that occurred in Country A subsequent to the Q2 financials in which the company paid a $40,000 penalty to the government (a material number). After careful considerations, management decided not to recognize this for the Q2 financials.

Item Country A Country B Country A Country B

YTD Q2 YTD Q2 Annual Annual
Pretax Book Income 40,000 10,000 100,000 20,000

Meal & Entertainment Adjustments 5,000 1,000 20,000 2,000

Accrued Vacation Adjustments 5,000 300 15,000 600

Depreciation Adjustments (15,000) (5,000) (50,000) (10,000)

Tax Credits 5,000 20,000

You do not need to consider how to split out the interim prevision on the balance sheet. Round the rate used to the nearest tenth.

Answer rating: 100% (QA)

The journal entry to record the interim provision for income taxes would be as follows Dr I... View the full answer