Perkins Inc.'s accounting records show the following data for 2019. Pre-tax financial income was $640,000. The officers' life insurance expense was $16,000. Equipment purchased in early January for $450,000, straight-line depreciation over 5-year life, no salvage value. Perkins Inc. used a 40% rate to calculate depreciation for tax purposes. Product warranties were estimated at $75,000 in 2018. Actual repair and labor costs related to warranties in 2019 were $15,000, with the remainder estimated to be paid equally in 2029 and 2021. Sales on an accrual basis were $160,000. For tax purposes, $90,000 was recorded on the installment sales method. Fines for pollution violations were $3,600. The tax rate is 30%.

Required: Prepare journal entries for Deferred Tax in 2019.

Answer rating: 100% (QA)

To prepare the journal entries for Deferred Tax in 2019 we need to identify the temporary differences between the tax basis and the financial reportin... View the full answer