Reference no: EM133132717
Question - Following is a partial income statement for Ryan Reynolds Corporation:
Ryan Reynolds Corporation Income Statement For the year ended December 31, 2021
Revenue $5,475,900
Expenses:
Cost of goods sold 3,250,000
Amortization 250,900
Meals and entertainment 300,000
Warranty expense 425,000
Net income $1,250,000
Additional information related to Reynolds is as follows:
Prior to 2021, taxable and accounting income were the same each year.
CCA charged on the company's tax return amounted to $350,200.
Crabbe sells its products with a two-year warranty included. Warranty expense in 2021 included $250,000 of actual warranty costs incurred during the year plus estimated warranty repair costs for the remainder of the warranty period.
During 2021, Crabbe recorded a sale of $300,000 which was to be paid in two instalments (under tax law, instalment payments are taxable only when collected). The customer paid the first $100,000 in November 2021, with the remainder to be paid in 2022.
The tax rate was 29% for 2021. In September 2021, the federal government announced the tax rate would change to 32% beginning in January, 2022.
Taxable income is expected for all future periods.
Required - Prepare the journal entries to record current and future income taxes. Show all your calculations.