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

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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 for2017â€“2020 are as follows:
service revenue collections pre tax accounting income
2017 $ 688,000 $ 653,000 $ 220,000
2018 780,000 795,000 285,000
2019 745,000 715,000 255,000
2020 730,000 760,000 235,000
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 showsthe balances in service revenue receivable at December 31,2017â€“2020.) Required: 1. Prepare the appropriate journalentry to record Alsup's 2018 income taxes, Alsupâ€™s 2019 incometaxes and Alsupâ€™s 2020 income taxes.

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Solution 1 Computation of Taxable Income and Tax Payable Alsup Consulting Particulars 2018 2019 2020 Pre tax accounting income 28500000 25500000 23500000 Add Service revenue collection 79500000 71500000 76000000 Less service revenue as per books 78000000 See Answer

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2017	$	688,000	$	653,000	$	220,000
2018		780,000		795,000		285,000
2019		745,000		715,000		255,000
2020		730,000		760,000		235,000