The following information is available for Whynot Ltd. For its year ended December 31,20X1: I) Net...
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The following information is available for Whynot Ltd. For its year ended December 31,20X1: I) Net income before tax = $1,800,000. II) The net income before tax include $20,000 of dividends received from taxable Canadian corporations in which Whynot has investments III) Meals and entertainment expense of $10,000. IV) On January 1,20X1, Whynot purchased an equipment,its costing $600,000,ten years useful life, no residual value, straight- line depreciation method used. Depreciation expense : $60,000. Capital cost allowance(CCA) : $90,000. V) Tax rate was 30% For its year ended December 31,20X2: I) Net income before tax = $2,100,000. II) Net income before tax includes $22,000 of dividends received from taxable Canadian companies in which Whynot has investments. III) On January 1,20X1, the company purchased an equipment,its costing $600,000, ten years useful life, no residual value, straight- line depreciation method used. Depreciation expense : $60,000. Capital cost allowance(CCA): $80,000. Required a) Calculate the ending balance of warranty liability & the current portion of income tax expense and deferred portion of income tax expense for 20X1. b) Prepare the journal entries to record the current and deferred income tax expense for 20X1. c) Calculate the ending balance of warranty liability & the current portion of income tax expense and deferred portion of income tax expense for 20X2. d) Prepare the journal entries to record the current and deferred income tax expense for 20X2. The following information is available for Whynot Ltd. For its year ended December 31,20X1: I) Net income before tax = $1,800,000. II) The net income before tax include $20,000 of dividends received from taxable Canadian corporations in which Whynot has investments III) Meals and entertainment expense of $10,000. IV) On January 1,20X1, Whynot purchased an equipment,its costing $600,000,ten years useful life, no residual value, straight- line depreciation method used. Depreciation expense : $60,000. Capital cost allowance(CCA) : $90,000. V) Tax rate was 30% For its year ended December 31,20X2: I) Net income before tax = $2,100,000. II) Net income before tax includes $22,000 of dividends received from taxable Canadian companies in which Whynot has investments. III) On January 1,20X1, the company purchased an equipment,its costing $600,000, ten years useful life, no residual value, straight- line depreciation method used. Depreciation expense : $60,000. Capital cost allowance(CCA): $80,000. Required a) Calculate the ending balance of warranty liability & the current portion of income tax expense and deferred portion of income tax expense for 20X1. b) Prepare the journal entries to record the current and deferred income tax expense for 20X1. c) Calculate the ending balance of warranty liability & the current portion of income tax expense and deferred portion of income tax expense for 20X2. d) Prepare the journal entries to record the current and deferred income tax expense for 20X2.
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Answer rating: 100% (QA)
SOLUTION a Calculation of warranty liability The information provided does not include any details about warranty expenses or the warranty liability balance at the beginning of the year so we cannot c... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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