On 1 January 20X7, Change Incorporated commenced business operations. At 31 December 20X9, the following information relates
Question:
On 1 January 20X7, Change Incorporated commenced business operations. At 31 December 20X9, the following information relates to Chang: 20X7 20X8 20X9 Earnings (loss) before tax $ 334,900 $ (486,100 ) $ 785,000 Tax rate (enacted in each year) 30 % 35 % 40 % Depreciation expense (asset cost was $730,000) 63,000 63,000 63,000 Capital cost allowance 219,000 0 91,000 Dividends received (nontaxable) 41,000 66,500 66,500 Golf club dues 10,900 10,900 10,900 Required:
1. Prepare journal entries to record tax for 2017, 2018, and 2019. Assume that the loss carry forward usage in 2018 is considered to be probable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. Record entry for current and deferred income tax expense payable. (2017)
b. Record entry for current and deferred income tax benefit receivable. (2018)
c. Record entry for current and deferred income tax expense payable. (2019)
d. Record entry for current and deferred income tax benefit receivable. (2019)
2. Prepare journal entries to record tax for 2017, 2018, and 2019. Assume that the loss carries forward usage in 2018 is not considered to be probable but is considered to be probable in 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. Record entry for current and deferred income tax expense payable. (2017)
b. Record entry for current and deferred income tax benefit receivable. (2018)
c. Record entry for current and deferred income tax expense payable. (2019)
d. Record entry for current income tax benefit recoverable. (2019)
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott