Assume no difference between state taxable income and federal taxable income.
Assume state combined rate of 6.5% and a federal rate of 35%.
Tax Rates have not changed from last year.
Question: What Journal Entries should be booked for the 2020 tax provision?
Cumulative Temporary Differences EOY
Cumulative Temporary Differences BOY
Current Income Tax Expense
P/Y True Ups
Current Year: Pre-tax book income (loss) Schedule M-3 adjustments: Bad debts UNICAP Inventory reserve Prepaid insurance Accrued dividends Equity in sub. earnings Depreciation Accrued vacation pay Accrued bonuses Accrued professional fees DRD Auto lease inclusion Meals & entertainment Officers' life insurance Organization costs Stock option expense Other
15,781,666
200,000
1,400,000
240,000
(200,000)
(60,000)
25,000
75,000
350,000
70,000
(75,000)
(20,000)
5,000,000
(2,310,473)
50,000
200,000
(75,000)
(56,000)
700
500,000
75,000
1,000,000
372,200
300,000
1,750,000
300,000
(275,000)
(80,000)
(10,000)
What Journal Entries should be booked for the 2020 tax provision?
(323,445)
125,000
100,000
75,000
(2,633,918)
175,000
300,000
140,000
130,000
Total - Taxable Income True-ups Subtotal for current exp
1,696,555
15,000
10,183,693
15,000
10,198,693
(33,918)
State Tax Expense 6.5% 662,915
Federal Taxable Income 9,535,778
Federal Tax Expense 35.0% 3,337,522
