What is the ending balance in the deferred tax liability account related to these installment sales at the end of Year 1?
What is the ending balance in the deferred tax liability account related to these installment sales at the end of Year 1?
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 1BCRQ
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Question
Sicora Inc. reported installment sales totaling $670,000 in its income statement for Year 1, its first year of operations. Sicora is not required to report installment sales income on its tax return until the cash is collected. Sicora will make the collections on these installment sales as follows:
Year 1 | $ | 70,000 | |
Year 2 | 130,000 | ||
Year 3 | 140,000 | ||
Year 4 | 160,000 | ||
Year 5 | 170,000 | ||
Total | $ | 670,000 | |
The enacted tax rate is 30% in each of these years. What is the ending balance in the
deferred tax liability:
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