Seymour Associates computed a pretax financial income of $280,000 for the first year of its operations ended December 31,2014.Included in financial income was $20,000 of nondeductible expense and $70,000 gross profit on installment sales that was deferred for tax purposes until the installments were collected.
The temporary differences are expected to reverse in the following pattern.

The enacted tax rates for this year and the next three years are as follows:

(1)Prepare a schedule showing the reversal of the temporary differences and the computation of income taxes payable and deferred tax assets or liabilities as of December 31,2014.
(2)Prepare journal entries to record income taxes payable and deferred income taxes.
(3)Prepare the income statement for Seymour beginning with "Income from continuing operations before income taxes" for the year ended December 31,2014.

Question

Seymour Associates computed a pretax financial income of $280,000 for the first year of its operations ended December 31,2014.Included in financial income was $20,000 of nondeductible expense and $70,000 gross profit on installment sales that was deferred for tax purposes until the installments were collected.
The temporary differences are expected to reverse in the following pattern.
  
The enacted tax rates for this year and the next three years are as follows:
  
(1)Prepare a schedule showing the reversal of the temporary differences and the computation of income taxes payable and deferred tax assets or liabilities as of December 31,2014.
(2)Prepare journal entries to record income taxes payable and deferred income taxes.
(3)Prepare the income statement for Seymour beginning with "Income from continuing operations before income taxes" for the year ended December 31,2014.

Quizplus · Accepted Answer

The Answer of Seymour Associates computed a pretax financial income of $280,000 for the first year of its operations ended December 31,2014.Included in financial income was $20,000 of nondeductible expense and $70,000 gross profit on installment sales that was deferred for tax purposes until the installments were collected.
The temporary differences are expected to reverse in the following pattern.
  
The enacted tax rates for this year and the next three years are as follows:
  
(1)Prepare a schedule showing the reversal of the temporary differences and the computation of income taxes payable and deferred tax assets or liabilities as of December 31,2014.
(2)Prepare journal entries to record income taxes payable and deferred income taxes.
(3)Prepare the income statement for Seymour beginning with "Income from continuing operations before income taxes" for the year ended December 31,2014.

Seymour Associates Computed a Pretax Financial Income of $280,000 for the First