Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement,...

90.2K

Verified Solution

Question

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 for2017–2020 are as follows:
Service Revenue Collections Pretax Accounting
Income
2017 $ 687,000 $ 662,000 $ 230,000
2018 790,000 795,000 295,000
2019 755,000 725,000 265,000
2020 740,000 760,000 245,000

There are no differences between accounting income and taxableincome other than the temporary difference described above. Theenacted tax rate for each year is 40%.

(Hint: You may find it helpful to prepare a schedule that shows thebalances in service revenue receivable at December 31,2017–2020.)

Required:
1. Prepare the appropriate journal entry to recordAlsup's 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s2020 income taxes. (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Enter your answers in thousands.)

Answer & Explanation Solved by verified expert

3.8 Ratings (631 Votes)

Solution 1 Computation of Taxable Income and Tax Payable Alsup Consulting Particulars 2018 2019 2020 Pre tax accounting income 29500000 26500000 24500000 Add Service revenue collection 79500000 72500000 76000000 Less service revenue as per books 79000000 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

	Service Revenue		Collections		Pretax Accounting Income
2017	$	687,000	$	662,000	$	230,000
2018		790,000		795,000		295,000
2019		755,000		725,000		265,000
2020		740,000		760,000		245,000