At the end of 2020, its first year of operations, Mac Inc. reported $120,000 pre-tax accounting income. expenses included $10,000 fine for violating the permit by-law which is not deductible for tax purpose. The account receivable balance was $20,000 at the end of 2020, which represented that 2020’s sale was not yet collected. Sales are recognized when earned but taxable when collected. The income tax rate is 20%. Mac adheres to IFRS requirements. 

Instructions: 

Compute Mac’s 2020 taxable income. 

What is 2020 tax payable? 

Indicate whether the uncollected credit sales of $20,000 a taxable temporary difference or a deductible temporary difference? Explain. 

Indicate the deferred tax will report on its December 31, 2020 SFP (the amount and whether it is deferred tax asset or deferred tax liability). 

Prepare journal entries to record both current and the deferred income taxes of 2020. 

Assume that Mac’s 2021 pre-tax accounting income is $120,000. At the end of 2021, $15,000 of the accounts receivable outstanding at the end of 2020 have been collected, leaving $5,000 still outstanding. No other differences exist between accounting and taxable incomes.

Determine Mac’s taxable income for 2021. 

Determined tax payable for 2021. 

Determine the deferred tax Mac will report on its December 31, 2021 SFP (the amount and whether it is deferred tax asset or deferred tax liability). 

Prepare journal entries to record both current and the deferred income taxes of 2021.

Answer rating: 100% (QA)

1 Taxable income for 2020 120000 10000 110000 2 Tax payable for 2020 110000 x 20 2... View the full answer