Sunland Corporation has provided the following information for the year ended December 31, 2020.

Sunland Corporation Income Statement For the Year Ended December 31, 2020
Revenue
Service Revenue		102,000
Dividend Revenue		11,200		$113,200
Operating Expenses
Supplies Expense		1,800
Depreciation Expense		20,500
Advertising Expense		1,000
Meals and Entertainment Expense		6,400
Rent Expense		9,300
Litigation Expense		7,600
Salaries and Wages Expense		41,900
Warranty Expense		3,800		92,300
Operating Income before income tax				$20,900

Additional Information:

1.		Sunland is privately owned and uses ASPE. The dividend revenue represents dividends received from taxable Canadian corporations.
2.		Sunland’s income tax rate is 30%.
3.		On January 1, 2020, Sunland had a future tax liability of $3,075 related to its property, plant, and equipment (PPE).
4.		During the year warranty expense of $3,800 was accrued. One-half of this amount was paid during 2020. This is the first year Sunland offers warranties on services rendered.
5.		Property, plant, and equipment were purchased for $102,500 on January 1, 2019. These assets are being depreciated on a straight-line basis over five years with no residual value and have a 20% CCA rate. This PPE is considered “eligible equipment” for purposes of the Accelerated Investment Incentive (the “AII”) (under the AII, instead of using the half-year rule, companies are allowed a first-year deduction using 1.5 times the standard CCA rate).
6.		On July 1, Sunland was sued by a competitor. Although the lawsuit has not been finalized, management believes that it is likely that a settlement will be reached in the next year for $7,600.
7.		On November 30, $4,000 cash was paid in advance for four months of advertising, starting Dec. 1.

Calculate taxable income and taxes payable for 2020.

Taxable Income		$
Taxes Payable		$

Prepare the journal entries to record 2020 income taxes (current and future). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
(To record current tax expense.)
(To record future tax expense.)

Explain how the future tax amounts will be shown on the balance sheet.

Noncurrent Future Tax Liability		$
Current Future Tax Asset		$

Answer rating: 100% (QA)

A Calculation of Taxable income Particular Amount Amount Revenue Service Revenue 102000 Dividend Rev... View the full answer