Tyre Recycling Inc. reported the following pre-tax accounting incomes (losses):

Accounting (loss)/income Tax rates*

2021 $10,000 25%

2022 55,000 20%

2023 (112,000) 20%

2024 21,000 19% -for 2024 and beyond

• All enacted in 2021

The only timing difference was in 2023 when warranty expense was $40,000 and warranties paid out in cash was $30,000. For any losses, any carrybacks possible are done first, and then it is probable that 80% of them not carried back will be applicable against any future taxable income.

Required:

a) Prepare journal entries to record the tax implications for 2023. Show supporting information.

Answer rating: 100% (QA)

Solution In 2023 there is a timing difference betwee... View the full answer