Complex Company reported the following information relating to income before tax for accounting purposes:

In 2020, the entity recognized doubtful accounts of P100,000. Such accounts were considered worthless or uncollectible in 2021. Analysis of the tax and book records disclosed P120,000 in unearned rent income on December 31, 2020 that has been recognized as taxable income in 2020 when the cash was received.Also, on December 31, 2020, estimated warranty cost P300,000 had been recognized as expense on the books in 2020 when the product sales were made but is not deductible and the actual or tax purposes until paid. The unearned rent income on December 31, 2020 is realized and the warranty payments were made as follows:

Required:1. Prepare Journal entries for 2020, 2021, 2022 and 2023 to record income tax expense and deferred income tax arising from the temporary differences.

2. Present the deferred tax asset on December 31, 2021.  

Transcribed Image Text:

2020 2,000,000 3,000,000 4,000,000 5,000,000 30% 2021 2022 2023 Income tax rate 2020 2,000,000 3,000,000 4,000,000 5,000,000 30% 2021 2022 2023 Income tax rate

Answer rating: 100% (QA)

Journal entries Year Particulars Dr Cr 2020 Deferred Tax Assets Ac To Profit And Loss Account being ... View the full answer