Business, 26.10.2021 02:00 gpinney1883

Case Development began operations in December 2021. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2021 installment income was $852,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2022–2024 are as follows: 2022 $280,000 20%
2023 316,000 25
2024 256,000 25

Case also had product warranty costs of $318,000 expensed for financial reporting purposes in 2021. For tax purposes, only the $76,000 of warranty costs actually paid in 2021 was deducted. The remaining $242,000 will be deducted for tax purposes when paid over the next three years as follows:

2022 $90,000
2023 80,000
2024 72,000

Pretax accounting income for 2021 was $994,000, which includes interest revenue of $24,000 from municipal bonds. The enacted tax rate for 2021 is 20%.

Required:
a. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate journal entry to record Case’s 2021 income taxes.
b. What is Case’s 2021 net income?

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Case Development began operations in December 2021. When property is sold on an installment basis, C...

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