Question
At the beginning of 2020, Wertz Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2020, pretax income under the two methods was as follows: percentage-of-completion $120,000, and completed-contract $80,000. The tax rate is 20%. Prepare Wertz's 2020 journal entry to record the change in accounting principle.

 

Expert Solution

Want to see the full answer?

Check out a sample Q&A here
Blurred answer
Students who’ve seen this question also like:
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
Not helpful? See similar books
Intermediate Accounting: Reporting And Analysis
marketing sidebar icon
Want to see this answer and more?
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: At the beginning of 2020, Buffalo Construction Company changed from the completed-contract method to…

A: Income as per completed contract method = $60, 000 Tax = $60, 000*20% = $12, 000

Q: Cullen Construction Company, which began operations in 2020, changed from the completed-contract to…

A: (a)Calculate amount of net income that would be reported in 2021:Net income = Income before income…

Q: At the end of 2019, its first year of operations, Beattie Company reported taxable income of $39,000…

A: Journal entries are prepared to record the financial and non-financial transactions of the business…

Q: At the end of 2019, its first year of operations, Beattie Company reported taxable income of $42,000…

A: Date Account title and explanation Debit($) Credit($) 2019       Dec 31 Income tax…

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $90 million…

A: In order to prepare journal entry to record income taxes of Payne for 2021, two entry will be…

Q: okwa't Baboy Company prepared the following reconciliation of income per books with income per tax…

A: Formula: Total provision for income tax = Taxable income x Tax rate

Q: On December 31, 2020, Knight Industries had a deferred tax asset account with a balance of $65…

A: Deferred tax is a notional asset or liability to reflect corporate income taxation on a basis that…

Q: d of 2019, its first year of operations, Beattie Company reported taxable income of $40,000 and…

A: The exercise of recording financial activity for the first time in the books of accounts is known as…

Q: Marigold Corporation began 2020 with a $39,560 balance in the Deferred Tax Liability account. At the…

A: Formula: Income tax amount = Taxable amount x income tax rate Multiplying taxable amount with tax…

Q: PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliation between…

A: Total tax = Taxable amount x income tax rate = 250000 x 30% = 75,000

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $50 million…

A: Deferred Tax plus and postponed liabilities. Postponed liabilities (DTL) or postponed Tax plus (DTA)…

Q: Larkspur Construction Company changed from the completed-contract to the percentage-of-completion…

A: Journal entry is the process of recording the business transactions in the accounting books for the…

Q: PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliation between…

A: Solution: income tax payable to be presented in the statement of financial position at year end =…

Q: PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliation between…

A: Total tax = Taxable amount x income tax rate = 250000 x 30% = 75,000

Q: PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliation between…

A: Total Income tax = Taxable amount x income tax rate = 250000 x 30% = 75,000

Q: PRANCER Company, at the end of 2021, its first year of operations, prepared a reconciliation between…

A: Total income tax = Taxable amount x income tax rate = 250000 x 30% = 75,000

Q: Bramble Corp. had a Deferred Tax Asset account with a balance of $100,200 at the end of 2019 due to…

A: Journal entries refers to the process of systematically documenting or recording the financial…

Q: Vignette Construction Company changed from completed contract method to the percentage of completion…

A: Under the completed contract method of revenue recognition, all the revenues associated with the…

Q: Tokwa't Baboy Company prepared the following reconciliation of income per books with income per tax…

A: Note:  income tax provision is created on taxable income.   Total provision for income tax =…

Q: In its 2021 income statement, Crane Corp. reported depreciation of $3600000 and interest revenue on…

A: Deferred tax liability is the amount of liability that arises on account of differences in items as…

Q: Sandhill Inc., a real estate developing company, was accounting for its long-term contracts using…

A: Given that: Method = Percentage of completion method  Tax rate = 40%

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $25 million…

A: Given information is: At the end of 2020, Payne Industries had a deferred tax asset account with a…

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $40 million…

A: Deferred tax assets must be assessed each period in order to determine their recoverability. When…

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $25 million…

A: Journal entry: This is the first step to record accounts. It is written in the same order in which…

Q: Vignette Construction Company changed from completed contract method to the percentage of completion…

A: Deferred Tax liability-: Deferred tax is a conceptual asset or liability to indicate corporate…

Q: Vignette Construction Company changed from completed contract method to the percentage of completion…

A: Contract costing is like job costing where costing constitutes a unit of cost. It is used to measure…

Q: Concord Construction Company changed from the completed-contract to the percentage-of-completion…

A: Net income: The bottom line of income statement which is the result of excess of earnings from…

Q: At the end of 2019, its first year of operations, Slater Company reported a book value for its…

A: The question is based on the concept of Business Accounting.

Q: Crane Inc., a real estate developing company, was accounting for its long-term contracts using the…

A: Journal entry (JE) refers to posting of the transactions into the books of the company and it is the…

Q: At the end of 2021, a company has a deferred tax asset with a balance of $480,000.The company has a…

A: The valuation allowance is prepared to estimate the income tax expense.

Q: Lax Company at the end of 2019, its first year of operations, prepared a reconciliation between…

A: Income Tax is a form of indirect tax. It is the tax payable on the amount of income earned during a…

Q: Lax Company at the end of 2019, its first year of operations, prepared a reconciliation between…

A: Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Lax Company at the end of 2019, its first year of operations, prepared a reconciliation between…

A: Income Tax Payable:-It is an amount of tax that is due to the government by the company and should…

Q: At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $100 million…

A: When there is difference in income as per accounting records and as per tax laws, then it give rise…

Q: In 2018, Ryan Management collected rent revenue for 2019 tenant coccupancy. For financial reporting,…

A: Deferred Tax Deferred tax is an amount that is, computed on the basis of tax liability on the income…

Q: During 2019, Holmes Co. reports pretax financial income at $762,300 and a taxable income of…

A: The items which have taken place in the entity are to be taken to the journal book to record and…

Q: During 2019, Holmes Co. reports pretax financial income at $762,300 and a taxable income of…

A: Tax: Tax is a financial charge imposed by the county's government on the income of the person, and…

Q: During 2019, Holmes Co. reports pretax financial income at $762,300 and a taxable income of…

A: Pretax financial income- It is that income of the entity which it earns after deducting all the…

Q: During 2019, Holmes Co. reports pretax financial income at $762,300 and a taxable income of…

A: Deferred tax- It the amount of that tax which has already been paid or shall be paid in future due…

Q: During 2019, Holmes Co. reports pretax financial income at $762,300 and a taxable income of…

A: Deferred tax asset: Deferred tax asset can be defined as the asset that arises because of…

Q: Vignette Construction Company changed from completed contract method to the percentage of completion…

A: Tax: Tax is a financial charge imposed by the county's government on the income of the person, and…

Q: Vaughn Inc.’s only temporary difference at the beginning and end of 2019 is caused by a $3,300,000…

A: Deferred Tax Liability:-DTL is a tax that becomes due but not yet paid. The deferred come when there…

Q: Vaughn Inc.’s only temporary difference at the beginning and end of 2019 is caused by a $3,300,000…

A: The question is based on the concept of Taxation Accounting

Q: On January 1, 2021, Monster Company changed to the percentage of completion method of income…

A: The monster company was using completed contract method of income recognition. On December 31, 2020,…

Q: Teal Corp. has a deferred tax asset account with a balance of $73,600 at the end of 2019 due to a…

A: Click to see the answer

Q: IT Company reported the following results for the year ended December 31, 2020, its first year of…

A: Click to see the answer

Q: According to Tax Accounting rules, which of the following expenses have been incurred (and thus…

A: Tax is the charge levied by the central or state government on the income, capital gain or sale…

Q: ABC Corporation prepared the following reconciliation for its first year of operations: Pretax…

A: Solution: Taxable income = Pretax income - Tax exempt interest - Taxable temporary difference =…

Q: BL Co. reported a deferred tax liability of $15M for the year ended December 31, 2020, related to a…

A: (1) Retained earnings represent the earnings of the company that has been earned due to the business…

Q: Early in January 2019, Oler, Inc., purchased equipment costing $24,000. The equipment had a 2‑year…

A: Working Notes: 1. In 2019, Deferred tax liability (temporary difference will be $24,000 - $12,000) =…

Knowledge Booster
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
  • Intermediate Accounting: Reporting And Analysis
    Accounting
    ISBN:9781337788281
    Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
    Publisher:Cengage Learning
    SWFT Comprehensive Vol 2020
    Accounting
    ISBN:9780357391723
    Author:Maloney
    Publisher:Cengage
    SWFT Essntl Tax Individ/Bus Entities 2020
    Accounting
    ISBN:9780357391266
    Author:Nellen
    Publisher:Cengage
  • Individual Income Taxes
    Accounting
    ISBN:9780357109731
    Author:Hoffman
    Publisher:CENGAGE LEARNING - CONSIGNMENT
    SWFT Individual Income Taxes
    Accounting
    ISBN:9780357391365
    Author:YOUNG
    Publisher:Cengage
    SWFT Comprehensive Volume 2019
    Accounting
    ISBN:9780357233306
    Author:Maloney
    Publisher:Cengage
  • Intermediate Accounting: Reporting And Analysis
    Accounting
    ISBN:9781337788281
    Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
    Publisher:Cengage Learning
    SWFT Comprehensive Vol 2020
    Accounting
    ISBN:9780357391723
    Author:Maloney
    Publisher:Cengage
    SWFT Essntl Tax Individ/Bus Entities 2020
    Accounting
    ISBN:9780357391266
    Author:Nellen
    Publisher:Cengage
    Individual Income Taxes
    Accounting
    ISBN:9780357109731
    Author:Hoffman
    Publisher:CENGAGE LEARNING - CONSIGNMENT
    SWFT Individual Income Taxes
    Accounting
    ISBN:9780357391365
    Author:YOUNG
    Publisher:Cengage
    SWFT Comprehensive Volume 2019
    Accounting
    ISBN:9780357233306
    Author:Maloney
    Publisher:Cengage