Case Development began operations in December 2021. When property is sold on an installment basis,...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Case Development began operations in December 2021. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2021 installment income was $852,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 20222024 are as follows:
2022
$
280,000
20
%
2023
316,000
25
2024
256,000
25
Case also had product warranty costs of $318,000 expensed for financial reporting purposes in 2021. For tax purposes, only the $76,000 of warranty costs actually paid in 2021 was deducted. The remaining $242,000 will be deducted for tax purposes when paid over the next three years as follows:
2022
$
90,000
2023
80,000
2024
72,000
Pretax accounting income for 2021 was $994,000, which includes interest revenue of $24,000 from municipal bonds. The enacted tax rate for 2021 is 20%. Required:1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Cases 2021 income taxes. 2. What is Cases 2021 net income?
Answer & Explanation
Solved by verified expert
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!
