# Interperiod Tax Allocation Quick Company reports the following revenues and expenses in its pretax financial income for the year ended December 31, 2019: The revenues included in pretax financial income are the same amount as the revenues included in the company’s taxable income. A reconciliation of the expenses reported for pretax financial income to the expenses reported for taxable income, however, reveals four differences: 1. Depreciation deducted for financial reporting exceeded depreciation deducted for income taxes by $11,000. 2. Percentage depletion deducted for income taxes exceeded cost depletion deducted for financial reporting by$15,600. 3. Warranty costs deducted for income taxes exceeded warranty expenses deducted for financial reporting by $8,900. 4. Legal expense of$9,800 was deducted for financial reporting; it will be deducted for income taxes when paid in a future year. Quick expects its percentage depletion to exceed its cost depletion in each of the next 5 years by the same amount as in 2019. At the end of 2019, the other three expenses are expected to result in total future taxable or deductible amounts as follows: At the beginning of 2019, Quick had a deferred tax liability of $22,200 related to the depreciation difference and a deferred tax asset of$17,190 related to the warranty difference. The income tax rate for 2019 is 35%, but in 2018 Congress enacted a 30% rate for 2020 and future years. Required: 1. Compute Quick’s taxable income for 2019. 2. Prepare Quick’s income tax journal entry for 2019. Assume no valuation allowance is necessary. 3. Prepare a condensed 2019 income statement for Quick.

### Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

### Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

#### Solutions

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Chapter 18, Problem 6P
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