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Income Taxes at Selkirk Selkirk Company began operations on January 1, 2018. In its first year, the company had operating income before taxes of CAD 350,000. Other Information: 1. Depreciation expense was CAD 100,000 in 2018, but CCA claimed was only CAD 60,000 due to the application of the half-year rule. 2. Accounts receivable totalled CAD 85,000 at year-end. This amount will not be subject to tax until received. 3. Non-taxable gains of CAD 12,000 were realized on the sale of land. 4. Warranty expense of CAD 25,000 was accrued, but only the CAD 15,000 paid out is tax deductible. The company offers a 1-year warranty on its products. 5. An adjusting entry was made at year-end to accrue CAD 15,000 in legal expenses. This amount is tax deductible when accrued. 6. Dividend income of CAD 2,000 was earned on a CAD 20,000 portfolio investment in a Canadian-owned corporation. The dividend was received on November 1. 7. Selkirk received a judgment for CAD 14,000 in a case related to copyright infringement. The amount will be paid in full next year and will be subject to tax at that time. 8. A customer prepaid CAD 18,000 in revenue in late November. The amount is subject to tax now but will not be earned until next year. 9. In January, Selkirk incurred CAD 15,000 in R&D costs, which were expenses immediately because they did not meet the conditions for capitalization. They must be amortized over five years for tax purposes. 10. The combined federal and provincial tax rate is 25 percent. REQUIRED: 1. Make the journal entries to record income tax expenses in 2018. Prepare a partial income statement for 2018 relating to income taxes. 3. Prepare a partial statement of financial position for 2018 relating to income taxes. A Daroncila the statuton, and effective tau rator BA

Income Taxes at Selkirk Selkirk Company began operations on January 1, 2018. In its first year, the company had operating income before taxes of CAD 350,000. Other Information: 1. Depreciation expense was CAD 100,000 in 2018, but CCA claimed was only CAD 60,000 due to the application of the half-year rule. 2. Accounts receivable totalled CAD85,000 at year-end. This amount will not be subject to tax until received. 3. Non-tabable gains of CAD 12,000 were realized on the sale of tand. 4. Warranty expense of CAD 25,000 was accrued, but only the CAD 15,000 paid out is tax deductible. The company offers a 1 -year warranty on its products. 5. An adjusting entry was made at year-end to accrue CAD 15,000 in legal expenses. This amount is tax deductible when accrued. 6. Dusdend income of CAD 2000 was earned on a CAD 20.000 portfolio investment in a Canadan-owned corporation. The dividend was received on November 1. 7. Selkik received a judgment for CAD 14,000 in a case related to coppright infringement. The arnount will be paid in full noxt year and will be subject to tax at that time. 8. A customer prepaid CAD 18,000 in revenue in tate November. The amount is subject to tax now but will not be earned until next year. 9. In fanuary, Selkik incurred CAD 15,000 in ReD costs, which were expenses immedately because they did not meet the conditions for capitalization. They must be amortized over five years for tax purposes. 10, The combined federal and provincial tax rate is 25 percent. REQUIRED: 1. Make the journal entries to record income taxexpenses in 2018 . Prepare a partial income statement for 2018 relating to income taxes. 3. Prepare a partial statement of financiat postion for 2018 relating to incoine taxes

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