Solution-Create the journal entries to record income taxes

Create the journal entries to record income taxes

Assignment Help Financial Accounting

Reference no: EM132601829

For the year ended December 31, 2020, Pharoah Ltd. reported income before income taxes of $90,000.

In 2020, Pharoah Ltd. paid $69,000 for rent; of this amount, $23,000 was expensed in 2020. The remaining $46,000 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2021-2022 period. The full $69,000 was deductible for tax purposes in 2020.
The company paid $76,000 in 2020 for membership in a local golf club (which was not deductible for tax purposes).
In 2020 Pharoah Ltd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2020 were $43,000, of which $29,000 was actual repairs for 2020 and the remaining $14,000 was estimated repairs to be completed in 2021.
Meal and entertainment expenses totalled $23,000 in 2020, only half of which were deductible for income tax purposes.
Depreciation expense for 2020 was $210,000. Capital Cost Allowance (CCA) claimed for the year was $234,000.
Pharoah was subject to a 20% income tax rate for 2020. Pharoah follows IFRS. At January 1, 2020, Pharoah Ltd. had no balances in deferred tax accounts.

Question 1: Calculate taxable income and taxes payable for year 2020

Question 2: Prepare the journal entries to record 2020 income taxes (current and deferred).

Reference no: EM132601829

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Create the journal entries to record income taxes : For the year ended December 31, 2020, Pharoah Ltd. reported income before income taxes of $90,000. Prepare the journal entries to record 2020 income taxes.

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Create the journal entries to record income taxes

Reference no: EM132601829

Reference no: EM132601829

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