Question - Alsup 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 Collections Pretax Accounting
Income
2010 $ 650,000 $ 620,000 $ 186,000
2011 750,000 770,000 250,000
2012 715,000 700,000 220,000
2013 700,000 720,000 200,000
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 40%.
(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.
(2) Prepare the appropriate journal entry to record Alsup's 2012 income taxes.
(3) Prepare the appropriate journal entry to record Alsup's 2013 income taxes.