The pretax financial income of Truttman Company differs from its taxable income throughout each of 4 years as follows. Year Pretax Financial Income Taxable Income Tax Rate 2020 $290,000 $180,000 35% 2021 $320,000 $225,000 20% 2022 $350,000 $260,000 20% 2023 $420,000 $560,000 20% Pretax financial income for each year includes a nondeductible expense of $30,000 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2020. Instructions a. Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 20% was not enacted until the beginning of 2021. b. Prepare the income statement for 2021, beginning with Income before income taxes.
The pretax financial income of Truttman Company differs from its taxable income throughout each of 4 years as follows.
|
Year
|
Pretax Financial Income
|
Taxable Income
|
Tax Rate
|
|
2020
|
$290,000
|
$180,000
|
35%
|
|
2021
|
$320,000
|
$225,000
|
20%
|
|
2022
|
$350,000
|
$260,000
|
20%
|
|
2023
|
$420,000
|
$560,000
|
20%
|
Pretax financial income for each year includes a nondeductible expense of $30,000 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one
Instructions
a. Prepare
b. Prepare the income statement for 2021, beginning with Income before income taxes.
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 5 images
