Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared. Taxable income 2019 2020 2021 Excess of revenues over expenses (excluding two temporary differences) $160,000 $210,000 $90,000 Installment gross profit collected 8,000 8,000 8,000 Expenditures for warranties (5,000 ) (5,000 ) (5,000 ) Taxable income $163,000 $213,000 $93,000 Pretax financial income 2019 2020 2021 Excess of revenues over expenses (excluding two temporary differences) $160,000 $210,000 $90,000 Installment gross profit recognized 24,000 -0- -0- Estimated cost of warranties (15,000 ) -0- -0- Income before taxes $169,000 $210,000 $90,000 The tax rates in effect are 2019, 40%; 2020 and 2021, 45%. All tax rates were enacted into law on January 1, 2019. No deferred income taxes existed at the beginning of 2019. Taxable income is expected in all future years. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019, 2020, and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020Dec. 31, 2019Dec. 31, 2021 Dec. 31, 2021Dec. 31, 2019Dec. 31, 2020 Dec. 31, 2020Dec. 31, 2021Dec. 31, 2019

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 74E

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Exercise 19-15

Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The following income computations have been prepared.

Taxable income	2019		2020		2021
Excess of revenues over expenses (excluding two temporary differences)	$160,000		$210,000		$90,000
Installment gross profit collected	8,000		8,000		8,000
Expenditures for warranties	(5,000	)	(5,000	)	(5,000	)
Taxable income	$163,000		$213,000		$93,000

Pretax financial income	2019		2020		2021
Excess of revenues over expenses (excluding two temporary differences)	$160,000		$210,000		$90,000
Installment gross profit recognized	24,000		-0-		-0-
Estimated cost of warranties	(15,000	)	-0-		-0-
Income before taxes	$169,000		$210,000		$90,000

The tax rates in effect are 2019, 40%; 2020 and 2021, 45%. All tax rates were enacted into law on January 1, 2019. No deferred income taxes existed at the beginning of 2019. Taxable income is expected in all future years.

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019, 2020, and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2020Dec. 31, 2019Dec. 31, 2021

Dec. 31, 2021Dec. 31, 2019Dec. 31, 2020

Dec. 31, 2020Dec. 31, 2021Dec. 31, 2019

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