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Calculate seen taxable income and taxes payable

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Reference no: EM133168875

Question - Seen Ltd, at the end of 2020, its first year of operations reported the following:

Pre tax accounting income of $300,000.

Depreciable equipment purchased during the year resulted in excess of CCA over depreciation for financial reporting purposes of $600,000. This temp difference will reverse and cause taxable amounts of $200,000 in each of the next three years.

The company recorded estimated warranty expenses and warranty liability of $500,000. Warranty costs are deductible for tax purposes when paid. The estimated warrant expenses of $500,000 will be deductible in 2023. The enacted tax rate is 25% and is not expected to change. Seen expects to report taxable income through 2023.

Required -

A. Calculate Seen's taxable income and taxes payable for 2020. Show calculations and round answers to the nearest dollar.

B. Complete the schedule to show the future taxable and or deductible amounts.

C. Prepare the journal entries to record current and deferred income taxes for 2020. Provide a brief explanation for each entry.

Reference no: EM133168875

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