The year-end of the publicly listed Company you work (Jonas Inc.) for is December 31, 2022, and
Question:
The year-end of the publicly listed Company you work (Jonas Inc.) for is December 31, 2022, and you must help the team prepare the tax entries for the current year ended. Per discussion with various team members, you get the following information: The company paid gym membership dues for directors of $10,000 in 2022. These are not deductible for tax purposes. Excluding tax estimates of $11,000 in the current year which were remitted to the CRA, the net income for 2022 is $2,000,000. Meals and entertainment expenses of $15,000 were incurred for 2022. Only 50% can be deducted for tax purposes. A depreciation expense of $1,000 was recorded in 2022 and the capital cost allowance amounted to $5,000 for 2022. For tax purposes, only payroll payments are deductible. The accrued payroll balance as of December 31, 2021, is $144,000. An additional $50,000 of accrued payroll expenses were booked in 2022. There were no settlements of accrued liability in 2022. For income tax purposes, revenue relating to accounts receivables are taxable when the cash is received. In 2021, they generated services revenue of $250,000. $20,000 of that amount was received that same year. The rest was collected in 2022. In 2022, services revenue of $450,000 was generated but COVID-19 impacted customers and none of that revenue was collected that year. $1,000 worth of fixed assets were purchased in 2021. The net book value of the depreciable capital assets was $25,000 as of December 31, 2021, and the undepreciated capital cost of capital assets $14,000. The company received non-taxable dividends of $11,000 in both 2021 and 2022. The enacted tax rate in 2021 was 18%. The enacted tax rate in 2022 was 25%. The Company had no taxes owed in the previous year
Required
1) Prepare the adjusting entries to appropriately record the income tax expense for 2022.
2) Prepare a partial income statement for 2022 and a partial balance sheet at December 31, 2022 that will show the income tax-related accounts. 3) Prepare the effective tax rate disclosure for 2022.
Business Statistics a decision making approach
ISBN: 978-0133021844
9th edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry