AC302-01_Unit 5_Assignment_Marjorie Bowden

AC302-01_Unit 5_Assignment_Marjorie Bowden - E19-5...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
At the end of 2010, its first year of operations, the Beattie Company reported taxable income of $38,000 and pretax financial income of $34,400. The difference is due to the way the company handles its warranty costs. For tax purposes, the company deducts the warranty costs as they are paid. For financial reporting purposes, the company provides provides for a year-end estimated warranty liability based on future expected costs. The company is subject to a 30% tax rate for 2010 and no change in the tax rate has been enacted for future years. Based on verifiable evidence, the company decides it should establish a valuation allowance of 60% of its ending deferred tax asset. Required 1. Prepare the income tax journal entry of the Beattie Company at the end of 2010. 2. Prepare the lower portion of the Beattie Company’s 2010 income statement. E19-5 Valuation Account
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Name: Marjorie Bowden An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare the income tax journal entry of the Beattie Company at the end of 2010. December 31, 2010 Income Tax Expense 10,320 Deferred Tax Asset 1,080 Income Taxes Payable 11,400 December 31, 2010 Income Tax Expense 648 Allowance to Reduce Deferred Tax Asset 648 2. Prepare the lower portion of the Beattie Company’s 2010 income statement. Income before income taxes $34,400 Income tax expense (10,968) Net Income $23,432 E19-5 Valuation Account
Background image of page 2
Name: Solutions An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare the income tax journal entry of the Beattie Company at the end of 2010. December 31, 2010 Income Tax Expense 10,320 Deferred Tax Asset 1,080 Income Taxes Payable 11,400 December 31, 2010 Income Tax Expense 648 Allowance to Reduce Deferred Tax Asset 648 2. Prepare the lower portion of the Beattie Company’s 2010 income statement. Income before income taxes $34,400 Income tax expense (10,968) Net Income $23,432 E19-5 Valuation Account
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
between pretax financial income and taxable income at the end of 2010. The first difference is expected to result in taxable amounts totaling $2,470 in future years. The second difference is expected to result in deductible amounts totaling $1,360 in future years. The company has a deferred tax asset of $372 and a deferred tax liability of $690 at the beginning of 2010. The current tax rate is 30% and no change in the tax rate has been enacted for future years. The company has positive, verifiable evidence of future taxable income. Required
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 05/30/2011.

Page1 / 12

AC302-01_Unit 5_Assignment_Marjorie Bowden - E19-5...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online