J-Matt, Inc., had pretax accounting income of $329,000 and taxable income of $372,000 in 2021. The only difference betweenaccounting and taxable income is estimated product warranty costs of $43,000 for sales in 2021. Warranty payments are expected tobe in equal amounts over the next three years (2022-2024) and will be tax deductible at that time. Recent tax legislation will changethe tax rate from the current 25% to 20% in 2023.Determine the amounts necessary to record J-Matt's income taxes for 2021 and prepare the appropriate journal entry.

Accounting income is the total amount of money that a business has made using defined accounting…

Answered: J-Matt, Inc., had pretax accounting…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 10P

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J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2021. The only difference between accounting and taxable income is estimated product warranty costs of $9,000 for sales in 2021. Warranty payments are expected to be in equal amounts over the next three years (2022–2024) and will be tax deductible at that time. Recent tax legislation will change the tax rate from the current 25% to 20% in 2023. Determine the amounts necessary to record J-Matt’s income taxes for 2021 and prepare the appropriate journal entry.
J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2018. The only difference between accounting and taxable income is estimated product warranty costs for sales this year. Warrantypayments are expected to be in equal amounts over the next three years. Recent tax legislation will change thetax rate from the current 40% to 30% in 2020. Determine the amounts necessary to record J-Matt’s income taxesfor 2018 and prepare the appropriate journal entry.
J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2016. The only difference between accounting and taxable income is estimated product warranty costs for sales this year. Warranty payments are expected to be in equal amounts over the next three years. Recent tax legislation will change the tax rate from the current 40% to 30% in 2018. Determine the amounts necessary to record J-Matt’s income taxes for 2016 and prepare the appropriate journal entry.
Allmond Corporation, organized on January 3, 2021, had pretax accounting income of $16 million and taxable income of $22 million for the year ended December 31, 2021. The 2021 tax rate is 25%. The only difference between accounting income and taxable Income is estimated product warranty costs. Assume that expected payments and scheduled tax rates (based on recently enacted tax legislation) are as follows: 2022 2023 2024 2025 $1 million 30 30 2 nillion 2 nillion 1 million 30t 20 Required: 1. Determine the amounts necessary to record Allmond's income taxes for 2021 and prepare the appropriate journal entry. 2. What is Allmond's 2021 net income? Complete this question by entering your answers in the tabs below. Required Required 1 GJ Required 2 Calculation Determine the amounts necessary to record Allmond's income taxes for 2021. (Enter your answers in millions rounded to 2 decimal places (1.e., S,500,000 should be entered as 5.50). Enter all amounts as positive values.) ($ In millions)…
A company made $49,000 in installment sales in 2021 and will receive payment from customers in 2022-2025. Taxable income for 2021 is $588,000, the enacted tax rate is 20% for all years, this is the only difference between pretax financial income and taxable income, and there were no deferred taxes at the beginning of 2021. What amount of income tax expense should the company report at the end of 2021?
Allmond Corporation, organized on January 3, 2021, had pretax accounting income of $29 million and taxable income of $42 million for the year ended December 31, 2021. The 2021 tax rate is 25%. The only difference between accounting income and taxable income is estimated product warranty costs. Assume that expected payments and scheduled tax rates (based on recently enacted tax legislation) are as follows: 2022 $4 million 3 million 2023 2024 2025 4 million 2 million Required: 1. Determine the amounts necessary to record Allmond's income taxes for 2021 and prepare the appropriate journal entry. 2. What is Allmond's 2021 net Income? 30% 30% 30% 25% Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 What is Allmond's 2021 net income? (Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) Net income million
On December 31, 2023, XYZ Inc. has an account payable of $2,000 for operating expenses incurred during the year. These expenses are only tax deductible when paid. XYZ normally pays for its operating expenses one month after they are incurred. Assuming a 20% tax rate, these expenses will result in: Multiple Choice О A deferred tax liability of $2,000. A deferred tax liability of $400. A deferred tax asset of $400. A deferred tax asset of $2,000.
In 2021, the company accrued wages payable $68,000 and will make the payment in 2022. Taxable income for 2021 is $600,000, the enacted tax rate is 20% for all years, this is the only difference between pretax financial income and taxable income, and there were no deferred taxes at the beginning of 2021. What amount of income tax expense should the company report at the end of 2021?
David Company, organized on January 1, 2021, had pretax accounting income of P5,000,000 and taxable income of P7,000,000 for the current year. The only temporary difference is accrued product warranty cost that is expected to be paid in 2022. The enacted tax rates are 30% for 2021 and 25% for 2022 and thereafter. What amount should be reported as total income tax expense in the income statement for 2021? 1,600,000 2,100,000 1,500,000 1,250,000
Bronson Industries reported a deferred tax liability of $5 million for the year ended December 31, 2020, related to a temporary difference of $20 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $30 million.Required:Determine the effect of the tax rate change and prepare the appropriate journal entry to record Bronson’s income tax expense in 2021. What effect, if any, will enacting the change in the 2022 tax rate have on Bronson’s 2021 net income?
Bronson Industries reported a deferred tax liability of $13.5 million for the year ended December 31, 2020, related to a temporary difference of $54 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 20% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $128 million.Required:1. Determine the effect of the change and prepare the appropriate journal entry to record Bronson’s income tax expense in 2021.2. Is Bronson required to revise prior years’ financial statements as a result of the change?3. Is Bronson required to provide a disclosure note to report the change?
Spamela Hamderson Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Pretax Income(Loss) Tax Rate 2018 $120,000 17 % 2019 90,000 17 % 2020 (280,000) 19 % 2021 300,000 19 % The tax rates listed were all enacted by the beginning of 2018. Assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized, prepare the income tax section of the 2020 income statement, beginning with the line “Operating loss before income taxes.” (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

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