California surplus inc qualifies to use the

Reference no: EM13570043

California Surplus Inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an installment basis. The total gain of $75000 was reported for financial reporting purposes in the period of sale. The installment period is 3 years; one-third of the sale price is collected in 2012 and the rest in 2013. The tax rate was 35% in 2012, and 30% in 2013 and 30% in 2014. The accounting and tax data is shown below. Financial Accounting Tax Return 2012 Income before temporary difference $ 175,000 $ 175,000 Temporary difference $ 75,000 $ 25,000 Income $ 250,000 $ 200,000 2013 Income before temporary difference $ 200,000 $ 200,000 Temporary difference $ - $ 25,000 Income $ 200,000 $ 225,000 2014 Income before temporary difference $ 180,000 $ 180,000 Temporary difference $ - $ 25,000 Income $ 180,000 $ 205,000

Required:

1) Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable for 2012, 2013, and 2014. No deferred income taxes existed at the beginning of 2012.

2) Explain how the deferred taxes will appear on the balance sheet at the end of each year.

3) Show the income tax expense section of the income statement for each year, beginning with "Income before income taxes."

Reference no: EM13570043

Questions Cloud

Lansbury manufacturing produces hair brushes the selling : lansbury manufacturing produces hair brushes. the selling price is 20 per unit and the variable costs are 8 per brush.

Lakshmi is single and provides you with the following tax : lakshmi is single and provides you with the following tax information for 2012 salary 200000 bank account interest 1000

Robert haddon contributed 70000 in cash and land worth : robert haddon contributed 70000 in cash and land worth 130000 to open a new business rh consulting. which of the

In 2010 toni purchased 100 shares of common stock in blue : in 2010 toni purchased 100 shares of common stock in blue corporation for 5280. in 2011 blue declared a stock dividend

California surplus inc qualifies to use the : california surplus inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an

What is the value of this 20 year lease the first payment : what is the value of this 20 year lease? the first payment due one year from today is 2000 and each annual payment will

Mitchell company has total current assets of 45000 which : mitchell company has total current assets of 45000 which includes inventory of 10000 and current liabilities of 17300.

At the end of the meal the issue arises of how the bill for : at the end of the meal the issue arises of how the bill for the group should be shared. one alternative is to figure

Lawrence owns a small candy store that sells one type of : lawrence owns a small candy store that sells one type of candy. his beginning inventory of candy was made up of 10000

User Account

All Pages