Question
Case Development began operations in December 2021. When property is sold on an installment basis, Case...
Case Development began operations in December 2021. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2021 installment income was $760,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2022–2024 are as follows:
| 2022 | $170,000 | 30% |
| 2023 | $410,000 | 40% |
| 2024 | $180,000 | 40% |
Pretax accounting income for 2021 was $1,068,000, which includes
interest revenue of $38,000 from municipal governmental bonds. The
enacted tax rate for 2021 is 30%.
1. Assuming no differences between accounting
income and taxable income other than those described above, prepare
the appropriate journal entry to record Case’s 2021 income
taxes.
2. What is Case’s 2021 net income?
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