The pretax financial income of Tamarisk Company differs from its taxable income throughout each of 4 years as follows. Year Pretax Financial Income Taxable Income Tax Rate 2020 $295,000 $180,000 35 % 2021 320,000 217,000 20 % 2022 335,000 264,000 20 % 2023 435,000 592,000 20 % Pretax financial income for each year includes a nondeductible expense of $29,300 (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.
The pretax financial income of Tamarisk Company differs from its taxable income throughout each of 4 years as follows. Year Pretax Financial Income Taxable Income Tax Rate 2020 $295,000 $180,000 35 % 2021 320,000 217,000 20 % 2022 335,000 264,000 20 % 2023 435,000 592,000 20 % Pretax financial income for each year includes a nondeductible expense of $29,300 (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.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 8DQ
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The pretax financial income of Tamarisk Company differs from its taxable income throughout each of 4 years as follows.
|
Year
|
Pretax
Financial Income |
Taxable Income
|
Tax Rate
|
||||
| 2020 | $295,000 | $180,000 | 35 | % | |||
| 2021 | 320,000 | 217,000 | 20 | % | |||
| 2022 | 335,000 | 264,000 | 20 | % | |||
| 2023 | 435,000 | 592,000 | 20 | % |
Pretax financial income for each year includes a nondeductible expense of $29,300 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one
Transcribed Image Text: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. (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 O for the amounts.)
Date Account Titles and Explanation
Debit
Credit
2020
2021
(To record the adjustment for the decrease in the enacted
tax rate.)
(To record income taxes for 2021.)
2022
Transcribed Image Text:2021
(To record the adjustment for the decrease in the enacted
tax rate.)
(To record income taxes for 2021.)
2022
2023
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