Walsh Services computed pretax financial income of $220,000 for 2017 and $288,000 for 2018. In preparing...

   

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Walsh Services computed pretax financial income of $220,000 for 2017 and $288,000 for 2018. In preparing the income tax return for the year, the tax accountant determined the following differences between financial income and taxable income for 2017 and 2018: 2017 2018 $40,000 30,000 (1) Nondeductible expenses (2) Nontaxable revenues (3) Uneamed rent of next two years received (4) Installment sales in financial income but not in taxable income The temporary Installment sales difference is expected to reverse in the following pattem: 2018 2019 2020 14,000 22,000 20,000 70,000 $14,000 32,000 24.000 $70.000 (5) Walsh purchase a new machine in 2018 for $150,000 and depreciates $50,000 a year from 2018 to 2020. For tax reporting, the depreciation expemse is as follows 2018 SI00,000 2019 35,000 2020 15,000 S150,000 The enacted tax rates for this year and the next three years are as follows: 2017 2018 2019 2020 Instructions (1) Prepare a schedule showing the reversal of the temporary differences and the computation of income taxes payable and deferred tax assets or liabilities as of December 31, 2017. (2) Prepare joumal entries to record income taxes payable and deferred income taxes for 2017, (3) Prepare the income statement for Walsh Services beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2017, (4) Prepare journal entries to record income taxes payable and deferred income taxes for 2018, (5) Prepare the income statement for Walsh Services beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2018. 40% 35% 32% 30% Walsh Services computed pretax financial income of $220,000 for 2017 and $288,000 for 2018. In preparing the income tax return for the year, the tax accountant determined the following differences between financial income and taxable income for 2017 and 2018: 2017 2018 $40,000 30,000 (1) Nondeductible expenses (2) Nontaxable revenues (3) Uneamed rent of next two years received (4) Installment sales in financial income but not in taxable income The temporary Installment sales difference is expected to reverse in the following pattem: 2018 2019 2020 14,000 22,000 20,000 70,000 $14,000 32,000 24.000 $70.000 (5) Walsh purchase a new machine in 2018 for $150,000 and depreciates $50,000 a year from 2018 to 2020. For tax reporting, the depreciation expemse is as follows 2018 SI00,000 2019 35,000 2020 15,000 S150,000 The enacted tax rates for this year and the next three years are as follows: 2017 2018 2019 2020 Instructions (1) Prepare a schedule showing the reversal of the temporary differences and the computation of income taxes payable and deferred tax assets or liabilities as of December 31, 2017. (2) Prepare joumal entries to record income taxes payable and deferred income taxes for 2017, (3) Prepare the income statement for Walsh Services beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2017, (4) Prepare journal entries to record income taxes payable and deferred income taxes for 2018, (5) Prepare the income statement for Walsh Services beginning with "Income from continuing operations before income taxes" for the year ended December 31, 2018. 40% 35% 32% 30%

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Walsh Services 1 Statement of Reconcilaition between the Financial Income and Taxable Income In Particulars Nature of Difference 2017 2018 Remarks Pre ... View the full answer