Assignment task:
Chex Inc. reports income of $125,000 for 2023, its second year of operations. The following items cause taxable income to be different than income reported on the financial statements.
CCA on the tax return is greater than depreciation on the income statement by $10,000.
Rent revenue reported on the tax return is $15,000 higher than rent revenue reported on the income statement.
Fines that are non-deductible appear as an expense of $5,000 pm the on the income statement.
Chex Inc.'s tax rate is 21% and the company expects to report taxable income in the future.
Chex Inc. follows the taxes payable method of accounting for income taxes under ASPE. During the year, Chex Inc., makes tax installment payments of $30,000.
Required:
1. Calculate the taxable income and income tax expense for the year ended December 31, 2023.
2. Prepare the journal entries to record income taxes at December 31, 2023.
3. Prepare the income statement for 2023 starting at the accounting income (income before taxes).
4. Provide the balance sheet presentation, if necessary, from resulting income tax accounts at December 31, 2023