The records for Zenon Co. show this data for 2021: Gross profit on installment...
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Accounting
The records for Zenon Co. show this data for 2021:
Gross profit on installment sales recorded on the books was $480,000. Gross profit from collections of installment receivables was $320,000.
Life insurance on officers was $3,800.
Machinery was acquired in January for $300,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2021.
Interest received on tax exempt Iowa State bonds was $9,000.
The estimated warranty liability related to 2021 sales was $21,600. Repair costs under warranties during 2021 were $13,600. The remainder will be incurred in 2022.
Pretax financial income is $700,000. The tax rate is 20%.
Required
(a) Prepare a schedule starting with pretax financial income and compute taxable income.
(b) Prepare the journal entry to record income taxes for 2021.
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