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Prepare Floormart Ltd journal entry for January

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Reference no: EM132814208

Problem - Floormart Ltd. is required by Canada Revenue Agency to make periodic (monthly) instalment payments, based on estimates of previous years' taxes payable. The company accrues income tax expense at the end of each month and submits a payment to CRA the 15th day of the next month. Floormart has a fiscal year-end of December 31, and has estimated the following relating to the upcoming fiscal year of 2020:

Estimated income tax expense for the year $126,000

Actual income tax expense for the year $92,000

Required -

a) Prepare Floormart Ltd.'s journal entry for January 31, 2020.

b) Prepare Floormart's journal entry for the instalment payment made on February 15, 2020.

c) Assuming 11 months of instalments have been made to CRA by December 15, 2020, prepare the adjusting journal entry for Floormart on December 31, 2020, based on its actual income tax expense for the year (given above).

Reference no: EM132814208

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