Question

Deferred Tax Liability: Revenue example • Kicks USA began operations on February 1, 2021. • When property is sold on an installment basis, Kicks USA recognizes installment income for financial reporting purposes in the year of the sale. • 2021 installment income was $880,000 and will be collected over the next three years. • Pretax accounting income for 2021 was $1,194,000. Scheduled collections for 2022 - 2024 are as follows: 2022 $200,000 2023 470,000 2024 210,000 Required: 1) Prepare income tax table 2) Prepare journal entry to record income taxes for 2021 Click to add notes

          Deferred Tax Liability: Revenue example

• Kicks USA began operations on February 1, 2021.
• When property is sold on an installment basis, Kicks USA recognizes
installment income for financial reporting purposes in the year of the sale.
• 2021 installment income was $880,000 and will be collected over the next
three years.
• Pretax accounting income for 2021 was $1,194,000.
Scheduled collections for 2022 - 2024 are as follows:

2022	$200,000
2023	470,000
2024	210,000

Required:
1) Prepare income tax table
2) Prepare journal entry to record income taxes for 2021

Click to add notes

Show more…

Deferred Tax Liability: Revenue example

• Kicks USA began operations on February 1, 2021.
• When property is sold on an installment basis, Kicks USA recognizes
installment income for financial reporting purposes in the year of the sale.
• 2021 installment income was 880,000 and will be collected over the next
three years.
• Pretax accounting income for 2021 was1,194,000.
Scheduled collections for 2022 - 2024 are as follows:

2022 200,000
2023 470,000
2024 210,000

Required:
1) Prepare income tax table
2) Prepare journal entry to record income taxes for 2021

Click to add notes

Added by Jessica K.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Federico Castro

Step 1

Prepare an income tax table: To prepare an income tax table, we need to calculate the taxable income for each year and apply the applicable tax rate. In this case, we will assume a tax rate of 30%. Year 2021: Pretax accounting income: $1,194,000 Installment Show more…

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Deferred Tax Liability Revenue Example Kicks USA began operations on February 1, 2021. When property is sold on an installment basis, Kicks USA recognizes installment income for financial reporting purposes in the year of the sale. The 2021 installment income was $880,000 and will be collected over the next three years. Pretax accounting income for 2021 was $1,194,000. Scheduled collections for 2022-2024 are as follows: 2022: $200,000 2023: $470,000 2024: $210,000 Required: 1. Prepare an income tax table. 2. Prepare a journal entry to record income taxes for 2021.

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