Prepare the journal entries to record income taxes

Reference no: EM133627874

In its first two years of operations, ending in 2020, Robert Inc paid taxes of $5,700 on taxable income of $30,000. The tax rate for 2021 is 20%.

Robert Inc's loss before taxes for 2021 is $152,000. Robert Inc's expenses included $710,000 of depreciation expense, and meals and entertainment costs of $18,000 (they are one-half deductible for tax purposes).

At the beginning of the year, Robert Inc had a future tax liability of $24,700 based on $130,000 of temporary differences related to its fixed assets.

Robert Inc will claim $660,000 of CCA in 2021. Management anticipates using all of the loss carryforwards within the allowable carryforward period.

Robert Inc has a calendar year end.

1. Calculate Robert Inc's taxable income/loss for 2021.

2. Prepare the journal entries to record income taxes for 2021.

3. Calculate Robert Inc's 2021 total tax expense/recovery. What is their effective tax rate for 2021?

Reference no: EM133627874

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