Prepare the bottom portion of Sheridan's 2021 income statement, beginning with "Income from continuing operations beforeincome taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)Sheridan CorporationIncome Statement (Partial)For the Year Ended December 31, 2021icome from Continuing Operations before Income Taxes1164000ncome Tax ExpenseCurrent$Deferredncome from Continuing OperationsGain on Discontinued Operations195000Less v-39000i156000let Income / (Loss)$%24 The following information has been obtained for Sheridan Corporation.1.Prior to 2020, taxable income and pretax financial income were identical.2.Pretax fınancial income is $1,634,000 in 2020 and $1,359,000 in 2021.On January 1, 2020, equipment costing $1,260,000 is purchased. It is to be depreciated on a straight-line basis over 5 yearsfor tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, asdiscussed in Appendix 11A.)3.Interest of $57,000 was earned on tax-exempt municipal obligations in 2021.Included in 2021 pretax financial income is a gain on discontinued operations of $195,000, which is fully taxable.6.The tax rate is 20% for all periods.7.Taxable income is expected in all future years.4.5.

Income statement is the financial statement which states the income as well as expenses which are…

ncome taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sheridan Corporation Income Statement (Partial) For the Year Ended December 31, 2021 come from Continuing Operations before Income Taxes 2$ 11 come Tax Expense rrent $

ncome taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sheridan Corporation Income Statement (Partial) For the Year Ended December 31, 2021 come from Continuing Operations before Income Taxes 2$ 11 come Tax Expense rrent $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Prepare the bottom portion of Sheridan's 2021 income statement, beginning with "Income from continuing operations before
income taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Sheridan Corporation
Income Statement (Partial)
For the Year Ended December 31, 2021
icome from Continuing Operations before Income Taxes
1164000
ncome Tax Expense
Current
$
Deferred
ncome from Continuing Operations
Gain on Discontinued Operations
195000
Less v
-39000
i
156000
let Income / (Loss)
$
%24

The following information has been obtained for Sheridan Corporation.
1.
Prior to 2020, taxable income and pretax financial income were identical.
2.
Pretax fınancial income is $1,634,000 in 2020 and $1,359,000 in 2021.
On January 1, 2020, equipment costing $1,260,000 is purchased. It is to be depreciated on a straight-line basis over 5 years
for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as
discussed in Appendix 11A.)
3.
Interest of $57,000 was earned on tax-exempt municipal obligations in 2021.
Included in 2021 pretax financial income is a gain on discontinued operations of $195,000, which is fully taxable.
6.
The tax rate is 20% for all periods.
7.
Taxable income is expected in all future years.
4.
5.

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