Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimat
Taxable income and pretax financial income would be identical for Huber Co. except for its treatments of gross profit on installment sales and estimated costs of warranties. The income computations shown on page 1164 have been prepared.
\r\nTaxable income 2013 2014 2015
\r\nExcess of revenues over expenses excluding two temporary differences) $160,000 $210,000 $90,000
\r\nInstallment gross profi t collected 8,000 8,000 8,000
\r\nExpenditures for warranties (5,000) (5,000) (5,000)
\r\nTaxable income $163,000 $213,000 $93,000
\r\nPretax fi nancial income 2013 2014 2015
\r\nExcess of revenues over expenses (excluding two temporary differences) $160,000 $210,000 $90,000
\r\nInstallment gross profi t earned 24,000 –0– –0–
\r\nEstimated cost of warranties (15,000) –0– –0–
\r\nIncome before taxes $169,000 $210,000 $90,000
\r\nThe tax rates in effect are 2013, 40%; 2014 and 2015, 45%. All tax rates were enacted into law on January 1, 2013. No deferred income taxes existed at the beginning of 2013. Taxable income is expected in all future years.
\r\nInstructions
\r\nPrepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013, 2014, and 2015.