Mighty Motors Ltd offers a warranty on all the spare parts it sells. This period the accrued warranty is $5,000. For tax purposes there is no deduction for the warranty until payments are made. Mighty Motors also has equipment that has a useful life for accounting purposes of 4 years and for tax purposes 3 years. The equipment was purchased at the beginning of the current period, cost $9,000, and has no residual value. The straight-line method of depreciation is used for both accounting and tax purposes. The accounting profit before tax this period is $80,000. The tax rate is 30 per cent. What are the journal entries to record the tax expense and tax payable?
E) None of the given answers.

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The Answer of Mighty Motors Ltd offers a warranty on all the spare parts it sells. This period the accrued warranty is $5,000. For tax purposes there is no deduction for the warranty until payments are made. Mighty Motors also has equipment that has a useful life for accounting purposes of 4 years and for tax purposes 3 years. The equipment was purchased at the beginning of the current period, cost $9,000, and has no residual value. The straight-line method of depreciation is used for both accounting and tax purposes. The accounting profit before tax this period is $80,000. The tax rate is 30 per cent. What are the journal entries to record the tax expense and tax payable?
E) None of the given answers.

Mighty Motors Ltd Offers a Warranty on All the Spare