Question
During 2018, Dream Catcher Company first year of operations, the company reported pretax financial income of...
During 2018, Dream Catcher Company first year of operations, the
company reported pretax financial income of $580,000. Dream
catcher’s enacted tax rate is 35% for 2018 and 40% for all later
years. Dream Catcher expects to have taxable income in each of the
next 5 years. The effects on future tax returns of temporary
differences existing at December 31, 2018, are summarized
below.
Future Value
| Details | 2019 | 2020 | 2021 | 2022 | 2023 | Total |
| Future taxable(deductible amounts) | ||||||
| installment sales | $80000 | $80000 | $80000 | 240000 | ||
| Depreciation | $12000 | $12000 | $12000 | $12000 | $12000 | $60000 |
| Unearned Rent | ($35000) | ($35000) | ($70000) |
Instructions
(a) Prepare a schedule to show the calculation of deferred
taxes at December 31, 2018.
(b) Compute taxable income for 2018.
(c) Prepare the journal entry to record income taxes payable,
deferred taxes and income tax expense for 2018.
Homework Answers
Answer #1
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