Problem 19-01The following information is available for Metlock Corporation for 2020.1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $122,000. This difference will reverse in equal amounts of $30,500 over the years 2021–2024.2. Interest received on municipal bonds was $11,000.3. Rent collected in advance on January 1, 2020, totaled $56,700 for a 3-year period. Of this amount, $37,800 was reported as unearned at December 31, 2020, for book purposes.4. The tax rates are 40% for 2020 and 35% for 2021 and subsequent years.5. Income taxes of $294,000 are due per the tax return for 2020.6. No deferred taxes existed at the beginning of 2020. Compute taxable income for 2020.Taxable income for 2020 $enter Taxable income for 2020 in dollars Compute pretax financial income for 2020.Pretax financial income for 2020 $enter Pretax financial income for 2020 in dollars Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020 and 2021. Assume taxable income was $1,018,000 in 2021DateAccount Titles and ExplanationDebitCredit2020enter an account titleenter a debit amountenter a credit amount enter an account titleenter a debit amountenter a credit amount enter an account titleenter a debit amountenter a credit amount enter an account titleenter a debit amountenter a credit amount2021enter an account titleenter a debit amountenter a credit amount enter an account titleenter a debit amountenter a credit amount enter an account titleenter a debit amountenter a credit amount enter an account titleenter a debit amountenter a credit amount Prepare the income tax expense section of the income statement for 2020, beginning with “Income before income taxes.”

Income tax = Taxable Income * tax rate or , Taxable Income = Income tax / Tax rate

Answered: The following information is available…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 4E: Single Temporary Difference: Multiple Rates At the end of 2019, Fulhage Company reported taxable...

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Problem 19-01

The following information is available for Metlock Corporation for 2020.

1.		Depreciation reported on the tax return exceeded depreciation reported on the income statement by $122,000. This difference will reverse in equal amounts of $30,500 over the years 2021–2024.
2.		Interest received on municipal bonds was $11,000.
3.		Rent collected in advance on January 1, 2020, totaled $56,700 for a 3-year period. Of this amount, $37,800 was reported as unearned at December 31, 2020, for book purposes.
4.		The tax rates are 40% for 2020 and 35% for 2021 and subsequent years.
5.		Income taxes of $294,000 are due per the tax return for 2020.
6.		No deferred taxes existed at the beginning of 2020.

Compute taxable income for 2020.

Taxable income for 2020		$enter Taxable income for 2020 in dollars

Compute pretax financial income for 2020.

Pretax financial income for 2020		$enter Pretax financial income for 2020 in dollars

Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020 and 2021. Assume taxable income was $1,018,000 in 2021

Date	Account Titles and Explanation	Debit	Credit
2020	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
2021	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

Prepare the income tax expense section of the income statement for 2020, beginning with “Income before income taxes.”

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