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Prepare the journal entry to record income taxes

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Question - The Billboard Company has a deferred tax liability in the amount of $11,200 at December 31, 2020, relating to a $32,000 installment sale receivable, $16,000 of which is collected in 2021. The tax rate in 2021 is 35%. However, the rate for 2022 and thereafter is changed during 2021 to 25%. Warranty expense in 2021 included in the determination of pretax GAAP income is $80,000, with these amounts expected to be incurred and deductible for tax purposes in 2022. Pretax GAAP income is $224,000 in 2021.

Required - Prepare the journal entry to record income taxes in 2021.

Reference no: EM133170467

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