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Prepare the year-end journal entries to record income taxes

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Reference no: EM132885253

The Summerlin Company reported pretax accounting income on its income statement as follows:

2021- 390,000

2022-$310,000

2023-$380,000

2024-$420,000

  • Included in the income of 2021 was an installment sale of property in the amount of $44,000. However, for tax purposes, Summerlin reported the income in the year cash was collected. Cash collected on the installment sale was $17,600 in 2022, $22,000 in 2023, and $4,400 in 2024.
  • Included in the 2023 income was $18,000 interest from investments in municipal governmental bonds.The enacted tax rate for 2021 and 2022 was 40%, but during 2022, new tax legislation was passed reducing the tax rate to 25% for the years 2023 and beyond.

Required:

Problem 1: Prepare the year-end journal entries to record income taxes for the years 2021-2024.

Reference no: EM132885253

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