Company Y had book income of $600,000. The following items wereidentified:1. Income from PA...Company...

60.1K

Verified Solution

Question

Accounting

Company Y had book income of $600,000. The following items wereidentified:
1. Income from PA Municiple Bonds: 10,000
2. Excess Depreciation Expense: 60,000
3. Officers Life Insurance Expense: 5,000
4. Bad Debt Provision (Expense): 7,000 (no- charge offs thisyear)
5. Warranty Reserve (Expense): 12,000 (no claims this year)
6. Meals and Entertainment Expense: 20,000 (100% ofexpenses)
Company Y's tax rate is 40%
Beginning of the year, cumulative temporary difference iscomputed as follows:
Book Accumulated Depreciation: 110,000
Tax Accumulated Depreciation: 150,000
Cumulative Difference in PP&E: 40,000
Cumulative Difference in Accounts Receuvable Provision:20,000
Cumulative Difference in Warranty Reseve: 80,000
Taxable Income: 674,000
Deferred Tax Asset: 31,600
Income Tax Payable: 269,600
Income Tax Expense: 238,000
1. Calculate Deferred expense/benefit
2. Prepare an adjusting journal entry to record thedeferred tax provision
3. Calculate total provision (current plusdeffered)

Answer & Explanation Solved by verified expert

4.2 Ratings (541 Votes)

1 Deferred Tax Expense Benefit Calculation It is presumed that in this part the question is related to Deferred Tax Expense and not Deferred Expense A deferred tax expense is a tax expense which has 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

Transcribed Image Text

In: AccountingCompany Y had book income of $600,000. The following items wereidentified:1. Income from PA...Company Y had book income of $600,000. The following items wereidentified:1. Income from PA Municiple Bonds: 10,0002. Excess Depreciation Expense: 60,0003. Officers Life Insurance Expense: 5,0004. Bad Debt Provision (Expense): 7,000 (no- charge offs thisyear)5. Warranty Reserve (Expense): 12,000 (no claims this year)6. Meals and Entertainment Expense: 20,000 (100% ofexpenses)Company Y's tax rate is 40%Beginning of the year, cumulative temporary difference iscomputed as follows:Book Accumulated Depreciation: 110,000Tax Accumulated Depreciation: 150,000Cumulative Difference in PP&E: 40,000Cumulative Difference in Accounts Receuvable Provision:20,000Cumulative Difference in Warranty Reseve: 80,000Taxable Income: 674,000Deferred Tax Asset: 31,600Income Tax Payable: 269,600Income Tax Expense: 238,0001. Calculate Deferred expense/benefit2. Prepare an adjusting journal entry to record thedeferred tax provision3. Calculate total provision (current plusdeffered)