Part II The records for 123 Inc. show the following data for the 2020 calendar year...

Transcribed Image Text:

Part II The records for 123 Inc. show the following data for the 2020 calendar year 1. Accounting income before taxes is $250,000. The income tax rate is 25% and is likely to remain at this rate for the foreseeable future 2 Machinery was acquired in January 2020 for $300,000. 123 Inc. uses straight-line depreciation over a ten year life (no residual value). For tax purposes, 123 Inc. uses CCA at 15% for 2020 (ignore the half-year rule). 3. Dividends received from a Canadian corporation were $4,000. These dividends are not taxable. 4. Instalment sales recorded on the books was $200,000. Collections of instalment receivables was $150,000. Amounts are'taxable when collected. 5. Golf club dues were $3,850. These are not tax deductible. 6. Warranty repair costs paid during 2020 were $13,000. The estimated recorded warranty liability related to 2020 sales was $19,600 Costs are deductible for tax purposes when paid. Required: a) Prepare a schedule (starting with accounting income) to calculate taxable income. b) Prepare the required adjusting journal entries to record income taxes for 2020. Date Account Debit Credit Part II The records for 123 Inc. show the following data for the 2020 calendar year 1. Accounting income before taxes is $250,000. The income tax rate is 25% and is likely to remain at this rate for the foreseeable future 2 Machinery was acquired in January 2020 for $300,000. 123 Inc. uses straight-line depreciation over a ten year life (no residual value). For tax purposes, 123 Inc. uses CCA at 15% for 2020 (ignore the half-year rule). 3. Dividends received from a Canadian corporation were $4,000. These dividends are not taxable. 4. Instalment sales recorded on the books was $200,000. Collections of instalment receivables was $150,000. Amounts are'taxable when collected. 5. Golf club dues were $3,850. These are not tax deductible. 6. Warranty repair costs paid during 2020 were $13,000. The estimated recorded warranty liability related to 2020 sales was $19,600 Costs are deductible for tax purposes when paid. Required: a) Prepare a schedule (starting with accounting income) to calculate taxable income. b) Prepare the required adjusting journal entries to record income taxes for 2020. Date Account Debit Credit

Answer rating: 100% (QA)

ANSWER Solution Calculation of Taxable income Pretax accounting income Permanent differences Div... View the full answer