Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engage- ment, up to six months after services commence. Alsup recognizes service revenue for financial reporting pur- poses when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2015-2018 are as follows: Pretax Accounting Collections Service Revenue Income $650,000 750,000 $620,000 $186,000 2015 2016 770,000 250,000 2017 715,000 700,000 220,000 2018 700,000 720,000 200,000 There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%. Required: 1. Prepare the appropriate journal entry to record Alsup's 2016 income taxes. 2. Prepare the appropriate journal entry to record Alsup's 2017 income taxes. 3. Prepare the appropriate journal entry to record Alsup's 2018 income taxes. (Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2015–2018.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engage-
ment, up to six months after services commence. Alsup recognizes service revenue for financial reporting pur-
poses when the services are performed. For tax purposes, revenue is reported when fees are collected. Service
revenue, collections, and pretax accounting income for 2015-2018 are as follows:
Pretax Accounting
Collections
Service Revenue
Income
$650,000
750,000
$620,000
$186,000
2015
2016
770,000
250,000
2017
715,000
700,000
220,000
2018
700,000
720,000
200,000
There are no differences between accounting income and taxable income other than the temporary difference
described above. The enacted tax rate for each year is 40%.
Required:
1. Prepare the appropriate journal entry to record Alsup's 2016 income taxes.
2. Prepare the appropriate journal entry to record Alsup's 2017 income taxes.
3. Prepare the appropriate journal entry to record Alsup's 2018 income taxes.
(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at
December 31, 2015–2018.)
Transcribed Image Text:Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engage- ment, up to six months after services commence. Alsup recognizes service revenue for financial reporting pur- poses when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2015-2018 are as follows: Pretax Accounting Collections Service Revenue Income $650,000 750,000 $620,000 $186,000 2015 2016 770,000 250,000 2017 715,000 700,000 220,000 2018 700,000 720,000 200,000 There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%. Required: 1. Prepare the appropriate journal entry to record Alsup's 2016 income taxes. 2. Prepare the appropriate journal entry to record Alsup's 2017 income taxes. 3. Prepare the appropriate journal entry to record Alsup's 2018 income taxes. (Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2015–2018.)
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