AccountingAlsup Consulting sometimes performs services for which it receives payment at the conclusion
of the engagement, up to six months after services commence. Alsup recognizes service revenue
for financial reporting purposes when the services are performed. For tax purposes, revenue is
reported when fees are collected. Service revenue, collections, and pretax accounting income for
2010–2013 are as follows:
Service
Revenue
Collectio
ns
Pretax Accounting
Income
2010
$ 650,000
$ 615,000
$ 182,000
2011
750,000
775,000
247,500
2012
715,000
700,000
221,650
2013
700,000
710,000
196,000
There are no differences between accounting income and taxable income other than the
temporary difference described above. The enacted tax rate for each year is 30%.
(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue
receivable at December 31, 2010–2013.)
Required:
(1
)
Prepare the appropriate journal entry to record Alsup's 2011 income taxes.
General Journal
Debit
Credit
Income tax expense
Deferred tax liability
Income tax payable
(2
)
Prepare the appropriate journal entry to record Alsup's 2012 income taxes.
General Journal
Debit
Credit
Income tax expense
Deferred tax liability
Income tax payable
(3
)
Prepare the appropriate journal entry to record Alsup's 2013 income taxes.
General Journal
Debit
Credit
Income tax expense
Deferred tax liability
Income tax payable
This question was answered on: Sep 21, 2023
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