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Installment income for financial reporting purposes




S19-2 (LO 2,6,7) Case Development began operations in December 2009. 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. 2009 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2010-2012 are as follows;2010 $150,000 30%;2011 250,000 40;2012 200,000 40;Case also had product warranty costs of $80,000 expensed for financial reporting purposes in 2009. For tax purposes, only the $20,000 of warranty costs actually paid in 2009 was deducted. The remaining $60,000 will be deducted for tax purposes when paid over the next three years as follows;2010 $ 20,000;2011 25,000;2012 15,000;Pretax accounting income for 2009 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2009 is 30%.;Required;1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case?s 2009 income taxes.;2. What is Case?s 2009 net income?;3. How should the deferred tax amounts be classified in a classified balance sheet?


Paper#26722 | Written in 18-Jul-2015

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