60.1K

Verified Solution

Link Copied!

E 16-26 Multiple differences; (This exercise is a variation of E 16-25, modified to include a second temporary difference.) Case Development began operations in December 2018. When property is sold on an installment basis, Case rec- ognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment multiple tax rates income is reported by the installment method. 2018 installment income was $600,000 and will be collected over LO16-1, LO16-2, the next three years. Scheduled collections and enacted tax rates for 2019-2021 are as follows: 016-4,L016-5, 016-6 2019 $150,000 30% 2020 2021 250,000 200,000 40 40 Case also had product warranty costs of $80,000 expensed for financial reporting purposes in 2018. For tax purposes, only the $20,000 of warranty costs actually paid in 2018 was deducted. The remaining $60,000 will be deducted for tax purposes when paid over the next three years as follows: 2019 2020 2021 $20,000 25,000 5,000 Pretax accounting income for 2018 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2018 is 30%. Required: I. Assuming no differences between accounting income and taxable income other than those described above. prepare the appropriate journal entry to record Case's 2018 income taxes. 2. What is Case's 2018 net income

Answer & Explanation Solved by verified expert

See Answer