What is the taxable income for the year ended December 31, 2018?

 What is the current/deferred tax journal entry to necessary at December 31, 2018

Information

2018 Pretax Accounting Income: $600,000

 2018 Municipal Bond Interest Income Recognized in Pretax Accounting Income: $10,000

 2018 Warranty Expense of $40,000 for Accounting Purposes

 2018 Actual Warranty Costs Incurred were $30,000

 December 31, 2018 Warranty Liability is $10,000

 2018 Installment Sales Included in Pretax Income Totaled $150,000

 2018 Installment Sales for Tax Purposes Totaled $100,000

 December 31, 2018 Installment Receivable was $50,000 (to be collected equally in 2019/20)

 Federal Fines Included Against Pretax Income totaled $20,000

 Fixed Assets Purchased Prior to January 1, 2018 were Fully Depreciated at 12/31/17 

EXCEPT:

 Fixed Assets purchased on January 1, 2017 for $150,000. 

Estimated Life is 4 Years 

 Depreciation for Accounting Purposes is Straight Line

 Depreciation for Tax Purposes for 4 Year Assets is 50%, 30%, 10%, and 10%

 Assume that the current balance in Deferred Tax Assets and Deferred Tax Liabilities PRIOR to the 2018 Closing Entry is Correct. 

 Federal Tax Rate is 20%

Answer rating: 100% (QA)

First lets calculate the taxable income For this we start with the Pretax Accounting Income provided of 600000 Next we need to adjust this for the var... View the full answer