Xenun Inc. uses the accrual method ofaccounting for financial reporting purposesand appropriately uses the installmentmethod of accounting for income taxpurposes. Profits of $1,200,000 recognized forbooks in 2020 will be collected in thefollowing years:Collection of Profits$200,000$400,000202120222023$600,000The enacted tax rate is 30% for 2020 and2021. The enacted tax rate is 35% for 2022and 2023.Prepared the necessary journal entries for2020, 2021, 2022, and 2023.

Journal : It is the book where all the business transactions are recorded at first by way of debit…

Answered: Inc. use ethod of accounting for…

Inc. use ethod of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes Profits of $1.200 000 recognized fr

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 48P

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Xenun Inc. uses the accrual method of
accounting for financial reporting purposes
and appropriately uses the installment
method of accounting for income tax
purposes. Profits of $1,200,000 recognized for
books in 2020 will be collected in the
following years:
Collection of Profits
$200,000
$400,000
2021
2022
2023
$600,000
The enacted tax rate is 30% for 2020 and
2021. The enacted tax rate is 35% for 2022
and 2023.
Prepared the necessary journal entries for
2020, 2021, 2022, and 2023.

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