Assuming no differences between accounting income

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Case Development began operations in December 2011. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2011 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2012-2014 are as follows:
Case also had product warranty costs of $80,000 expensed for financial reporting purposes in 2011. For tax purposes, only the $20,000 of warranty costs actually paid in 2011 was deducted. The remaining $60,000 will be deducted for tax purposes when paid over the next three years as follows:
Pretax accounting income for 2011 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2011 is 30%.

Required:

1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case's 2011 income taxes.

2. What is Case's 2011 net income?

3. How should the deferred tax amounts be classified in a classified balance sheet?

Reference no: EM131003615

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