Future Income Taxes Nevada Corp

Essay

Future income taxes Nevada Corp., at the end of 2014, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable income as follows: Estimated warranty expenses of $530,000 will be deductible in 2015, $200,000 in 2016, and $70,000 in 2017.The use of the depreciable assets will result in taxable amounts of $200,000 in each of the next three years. The enacted tax rate is 30% and is not expected to change. Instructions
a.Prepare a schedule of the future taxable and deductible amounts.
b.Prepare the required adjusting journal entries to record income taxes for 2014.