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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.

 

Date

Account

Debit

Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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