Cadbury Co. began operations in 2020. The following data relates to Cadbury ’s 2020 operations: Pretax financial income is $1,000,000. The tax rate is 21%. Cadbury estimates bad debt expense on 2020 accounts receivable was $35,000. Tax does not deduct the bad debts until an accounts receivable is determined to be uncollectible. Machinery was acquired in January for $500,000. Tax depreciation exceeds GAAP depreciation by 100,000. Interest received on tax-exempt FloridaState bonds was $30,000. Prepare the journal entry to record income tax payable, income tax expense, and any deferred taxes for 2020.
Cadbury Co. began operations in 2020. The following data relates to Cadbury ’s 2020 operations: Pretax financial income is $1,000,000. The tax rate is 21%. Cadbury estimates bad debt expense on 2020 accounts receivable was $35,000. Tax does not deduct the bad debts until an accounts receivable is determined to be uncollectible. Machinery was acquired in January for $500,000. Tax depreciation exceeds GAAP depreciation by 100,000. Interest received on tax-exempt FloridaState bonds was $30,000. Prepare the journal entry to record income tax payable, income tax expense, and any deferred taxes for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Cadbury Co. began operations in 2020. The following data relates to Cadbury ’s 2020 operations:
- Pretax financial income is $1,000,000. The tax rate is 21%.
- Cadbury estimates bad debt expense on 2020
accounts receivable was $35,000. Tax does not deduct thebad debts until an accounts receivable is determined to be uncollectible. - Machinery was acquired in January for $500,000. Tax
depreciation exceeds GAAP depreciation by 100,000. - Interest received on tax-exempt FloridaState bonds was $30,000.
Prepare the
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