Recording Multiple Temporary Differences Cruse Corporation started operations on January 1, 2020. Taxable income from the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Recording Multiple Temporary Differences Cruse Corporation started operations on January 1, 2020. Taxable income from the tax return is $4,560,000. Income tax rate is 25%. There were no beginning balances in deferred tax accounts. Additional information On December 31, 2020, GAAP basis of installment sale receivables, $528,000; tax basis, $0. Receivables will be collected equally over the years 2021, 2022, and 2023. On December 31, 2020, GAAP basis of litigation accrual, $432,000; tax basis, $0. Management expects the litigation loss to be recorded in the tax return in 2023. Required Schedule of Deferred Taxes and Journal Entry Separate Tax Scenarios a. Prepare schedules to determine deferred tax balances on December 31, 2020. Note: Do not use negative signs with your answers. Installment Receivable GAAP basis $ 176000 0 Tax basis Difference between GAAP and tax bases Tax rate 176000 25% 132000 Deferred tax asset, ending balance $ Litiigation Accrual GAAP basis $ 0 Tax basis 0 Difference between GAAP and tax bases 0 Tax rate 25% 0 Deferred tax liability, ending balance = $ b. Record the income tax journal entry on December 31, 2020. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. Date Account Name Dr. Cr. Dec. 31, 2020 Income Tax Expense + 0 0 Deferred Tax Liability + N/A Please answer all parts of the question. *** O O O O 0 OOOO 0 0 0 c. Record the income tax journal entry on December 31, 2020, assuming the following separate situations. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. 1. Taxable income is $2,640,000 for 2020. Date Account Name Dr. Cr. Dec. 31, 2020 Deferred Tax Liability ◆ Income Tax Expense ◆ ◆ Income Tax Payable N/A + 0 2. Deferred tax liability had a January 1, 2020, balance of $80,000. Date Account Name Dr. Dec. 31, 2020 Deferred Tax Liability + 0 Income Tax Expense + 0 ◆ 0 Income Tax Payable N/A 0 3. Deferred tax asset had a January 1, 2020, balance of $44,800. Date Account Name Dr. Dec. 31, 2020 Deferred Tax Asset + Income Tax Expense 0 Income Tax Payable ÷ 0 N/A + 0 4. Litigation loss was estimated at $272,000 instead of $432,000. Date Account Name Dr. Dec. 31, 2020 Income Tax Expense → + ◆ 0 + 0 5. Profit on installment sale was $704,000 instead of $528,000. Date Account Name Dr. Dec. 31, 2020. + + ◆ Please answer all parts of the question. 0 0 OO 0 0 0 0 0 0 0 0 Cr. Cr. Cr. Cr. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 000 Recording Multiple Temporary Differences Cruse Corporation started operations on January 1, 2020. Taxable income from the tax return is $4,560,000. Income tax rate is 25%. There were no beginning balances in deferred tax accounts. Additional information On December 31, 2020, GAAP basis of installment sale receivables, $528,000; tax basis, $0. Receivables will be collected equally over the years 2021, 2022, and 2023. On December 31, 2020, GAAP basis of litigation accrual, $432,000; tax basis, $0. Management expects the litigation loss to be recorded in the tax return in 2023. Required Schedule of Deferred Taxes and Journal Entry Separate Tax Scenarios a. Prepare schedules to determine deferred tax balances on December 31, 2020. Note: Do not use negative signs with your answers. Installment Receivable GAAP basis $ 176000 0 Tax basis Difference between GAAP and tax bases Tax rate 176000 25% 132000 Deferred tax asset, ending balance $ Litiigation Accrual GAAP basis $ 0 Tax basis 0 Difference between GAAP and tax bases 0 Tax rate 25% 0 Deferred tax liability, ending balance = $ b. Record the income tax journal entry on December 31, 2020. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. Date Account Name Dr. Cr. Dec. 31, 2020 Income Tax Expense + 0 0 Deferred Tax Liability + N/A Please answer all parts of the question. *** O O O O 0 OOOO 0 0 0 c. Record the income tax journal entry on December 31, 2020, assuming the following separate situations. Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order. Note: If the journal entry includes an extra line that is not required, select "N/A" as the account name and leave the Dr. and Cr. answers blank (zero) in the very last row of the journal entry. 1. Taxable income is $2,640,000 for 2020. Date Account Name Dr. Cr. Dec. 31, 2020 Deferred Tax Liability ◆ Income Tax Expense ◆ ◆ Income Tax Payable N/A + 0 2. Deferred tax liability had a January 1, 2020, balance of $80,000. Date Account Name Dr. Dec. 31, 2020 Deferred Tax Liability + 0 Income Tax Expense + 0 ◆ 0 Income Tax Payable N/A 0 3. Deferred tax asset had a January 1, 2020, balance of $44,800. Date Account Name Dr. Dec. 31, 2020 Deferred Tax Asset + Income Tax Expense 0 Income Tax Payable ÷ 0 N/A + 0 4. Litigation loss was estimated at $272,000 instead of $432,000. Date Account Name Dr. Dec. 31, 2020 Income Tax Expense → + ◆ 0 + 0 5. Profit on installment sale was $704,000 instead of $528,000. Date Account Name Dr. Dec. 31, 2020. + + ◆ Please answer all parts of the question. 0 0 OO 0 0 0 0 0 0 0 0 Cr. Cr. Cr. Cr. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 000
Expert Answer:
Answer rating: 100% (QA)
All amounts are in Parta Schedules GAAP Basis Income accounted Tax Basis Because nothing is received ... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
Students also viewed these accounting questions
-
Accounting Change Linden Company started operations on January 1, 2006, and has used the FIFO method of inventory valuation since its inception. In 2012, it decides to switch to the average cost...
-
Albertson's Locksmith Corporation started operations on January 1, 2019. Albertson's estimates uncollectibles using the percentage-of-credit-sales method. The following information pertains to the...
-
The company ABC Inc. began operations on January 1 of the current year. During the month of January they carried out various business activities. His two partners contributed $ 20,000, in cash, each,...
-
Classify the effect of a distribution in a year when the distributing corporation has the following conditions. a. A deficit in accumulated E & P and a positive amount in current E & P. If a...
-
The following items are reported on a companys balance sheet: Cash ...............$210,000 Marketable securities........ 120,000 Accounts receivable (net) ....... 110,000 Inventory ...............
-
Reggie needs a quick x-dollar loan, just until his next payday in two weeks to take advantage of a sale on ski equipment. The bank would take too long in paperwork, so he goes to a pawnshop. The...
-
How many days does the defendant have to remove an action to federal court after the defendant receives notice of the plaintiffs state court complaint?
-
On the last day of the fiscal year, Stanley Carpenter comes to you for a favor. He asks that you enter a check for $2,000 to CD Company for Miscellaneous Expense. You notice the invoice looks a...
-
F = = [2xy, x + y] Determine if vector field F is conservative. If it is, then find a potential function in the form of: where V is the potential function of F. F = -mVV
-
A lottery prize gives the winner a choice between (1) $10,000 now and another $10,000 in 5 years, or (2) four $6700 paymentsnow and in 5, 10, and 15 years. a. Which alternative should the winner...
-
On January 1, 201, Company A granted 10 stock options per employee to 10 employees in the production department on the condition that they worked for two years. Company A may decide whether to issue...
-
The following bar graph shows net purchases of bond mutual funds. Does this graph tell us anything? $8 $6 $4 $2 $7.9 billion 0 J F M A M J J AS 1991 *Net inflow to bond funds excluding reinvested...
-
Using the graph in Fig. 2.17, answer the following questions: (a) Which company has the higher current ratio? (b) Which companys current ratio appears to be more stable over time? Fig. 2.17 0.6 0.5...
-
The accompanying pie chart presents data on why teenagers drink. Use information shown in the pie chart to answer the following questions: (a) For what reason do the highest numbers of teenagers...
-
Using the data in Fig. 2.3, analyze the average rates of return for (a) The DJIA (b) The S&P 500 (c) Tri-Continental Corporation Fig. 2.3 Rate of Return (%) 40 35 30- 25- 20- 15 10- 5 0 16.8 11....
-
Which type of graph presents these data more effectively? To answer question, use the following results of the election to the General Assembly from one New Jersey district in 1991. Batten Lookabaugh...
-
What do the terms "position statement" versus a "change statement" mean? Give examples.
-
Suppose the government bond described in problem 1 above is held for five years and then the savings institution acquiring the bond decides to sell it at a price of $940. Can you figure out the...
-
How are trade receivables different from nontrade receivables?
-
On January 1, 2016, Concord Corp. signs a contract to lease manufacturing equipment from Stone Inc. Concord agree to make lease payments of $47,500 per year. Additional information pertaining to the...
-
Obtain LVMH (Moet Hennessy Louise Vuitton)s 2013 annual report using the Investor Relation portion of its web site (do a Web search for Moet Hennessy Louis Vuitt on investor relations). Required: 1....
-
The load resistor in the NMOS inverter in Figure \(16.3(\mathrm{a})\) is \(R_{D}=40 \mathrm{k} \Omega\). The circuit is biased at \(V_{D D}=3.3 \mathrm{~V}\). (a) Design the transistor...
-
The inverter circuit in Figure 16.3 (a) is biased at \(V_{D D}=3.3 \mathrm{~V}\). Assume the transistor conduction parameter is \(K_{n}=50 \mu \mathrm{A} / \mathrm{V}^{2}\). (a) Let \(R_{D}=100...
-
(a) Redesign the resistive load inverter in Figure 16.3 (a) so that the maximum power dissipation is \(0.25 \mathrm{~mW}\) with \(V_{D D}=3.3 \mathrm{~V}\) and \(v_{O}=0.15 \mathrm{~V}\) when the...
Study smarter with the SolutionInn App