Prepare the journal entries related to deferred tax

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The accounting records of Perkins Inc. show the following data for 2019. Pretax financial income was $640,000. Life insurance expense on officers was $16,000. Equipment was acquired in early January for $450,000, straight-line depreciation over 5 year life is used, with no salvage value. For tax purposes, Perkins Inc. used a 40% rate to calculate depreciation. Product warranties were estimated to be $75,000 in 2018. Actual repair and labor costs related to the warranties in 2019 were $15,000 and the remainder is estimated to be paid evenly in 2029 and 2021. Sales on an accrual basis were $160,000. For tax purposes, $90,000 was recorded on the installment sales method. Fines incurred for pollution violations were $3,600. The tax rate is 30%.

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Question 1: Prepare the journal entries related to Deferred Tax in 2019.

Reference no: EM132557894

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