Sandhill Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2019. Book Basis Tax Basis Equipment (net) $364,000 $304,000 Estimated warranty liability $192,000 $-0- It is estimated that the warranty liability will be settled in 2020. The difference in equipment (net) will result in taxable amounts of $19,100 in 2020, $30,600 in 2021, and $10,300 in 2022. The company has taxable income of $470,000 in 2019. As of the beginning of 2019, the enacted tax rate is 34% for 2019-2021, and 30% for 2022. Sandhill expects to report taxable income through 2022. (a) Your answer is partially correct. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit los Income Tax Expense 205772 205772
Sandhill Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2019. Book Basis Tax Basis Equipment (net) $364,000 $304,000 Estimated warranty liability $192,000 $-0- It is estimated that the warranty liability will be settled in 2020. The difference in equipment (net) will result in taxable amounts of $19,100 in 2020, $30,600 in 2021, and $10,300 in 2022. The company has taxable income of $470,000 in 2019. As of the beginning of 2019, the enacted tax rate is 34% for 2019-2021, and 30% for 2022. Sandhill expects to report taxable income through 2022. (a) Your answer is partially correct. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit los Income Tax Expense 205772 205772
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 49P
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