Alsup Consulting sometimes performs services for which itreceives payment at the conclusion of the...

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Accounting

Alsup Consulting sometimes performs services for which itreceives payment at the conclusion of the engagement, up to sixmonths after services commence. Alsup recognizes service revenuefor financial reporting purposes when the services are performed.For tax purposes, revenue is reported when fees are collected.Service revenue, collections, and pretax accounting income for2015–2018 are as follows:

Service Revenue Collections Pretax Accounting
Income
  2015 $ 624,000 $ 599,000 $ 160,000
  2016 720,000 730,000 225,000
  2017 685,000 660,000 195,000
  2018 670,000 690,000 175,000

     There are no differences betweenaccounting income and taxable income other than the temporarydifference described above. The enacted tax rate for each year is40%.
(Hint: You may find it helpful to prepare a schedule that showsthe balances in service revenue receivable at December 31,2015–2018.)
Required:
1.
Prepare the appropriate journal entry to record Alsup's 2016income taxes, Alsup’s 2017 income taxes and Alsup’s 2018 incometaxes. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field.Enter your answers in thousands.)

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Year 2015
Pretax accounting income	$160,000.00
Less: Service Revenue	-$624,000.00
Add: Cash collections	$599,000.00
Taxable income	$135,000.00

Journal Entry	Amt. in Thousands
Tax Expenses	$64.00
Deferred tax liability (40% x (624,000 - $599,000)/1000		$10.00
Taxes payable (40% x 135,000)/1000		$54.00

Year 2016
Pretax accounting income	$225,000.00
Less: Service Revenue	-$720,000.00
Add: Cash collections	$730,000.00
Taxable income	$235,000.00

Journal Entry	Amt. in Thousands
Tax Expenses	$90.00
Deferred tax liability (40% x (730,000 - $720,000)/1000	$4.00
Taxes payable (40% x 235,000)/1000		$94.00

Year 2017
Pretax accounting income	$195,000.00
Less: Service Revenue	-$685,000.00
Add: Cash collections	$660,000.00
Taxable income	$170,000.00

Journal Entry	Amt. in Thousands
Tax Expenses	$78.00
Deferred tax liability (40% x (685,000 - $660,000)/1000		$10.00
Taxes payable (40% x 170,000)/1000		$68.00

Year 2018
Pretax accounting income	$175,000.00
Less: Service Revenue	-$670,000.00
Add: Cash collections	$690,000.00
Taxable income	$195,000.00

Journal Entry	Amt. in Thousands
Tax Expenses	$70.00
Deferred tax liability (40% x (690,000 - $670,000)/1000	$8.00
Taxes payable (40% x 195,000)/1000		$78.00

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In: AccountingAlsup Consulting sometimes performs services for which itreceives payment at the conclusion of the engagement,...Alsup Consulting sometimes performs services for which itreceives payment at the conclusion of the engagement, up to sixmonths after services commence. Alsup recognizes service revenuefor financial reporting purposes when the services are performed.For tax purposes, revenue is reported when fees are collected.Service revenue, collections, and pretax accounting income for2015–2018 are as follows: Service RevenueCollectionsPretax AccountingIncome 2015$624,000$599,000$160,000 2016720,000730,000225,000 2017685,000660,000195,000 2018670,000690,000175,000 There are no differences betweenaccounting income and taxable income other than the temporarydifference described above. The enacted tax rate for each year is40%.(Hint: You may find it helpful to prepare a schedule that showsthe balances in service revenue receivable at December 31,2015–2018.)Required:1.Prepare the appropriate journal entry to record Alsup's 2016income taxes, Alsup’s 2017 income taxes and Alsup’s 2018 incometaxes. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field.Enter your answers in thousands.)

	Service Revenue		Collections		Pretax Accounting Income
2015	$	624,000	$	599,000	$	160,000
2016		720,000		730,000		225,000
2017		685,000		660,000		195,000
2018		670,000		690,000		175,000