E 16–25 - Case Development - Multiple tax rates; balance sheet classification ● LO1 LO4 LO5 LO8
Case Development began operations in December 2011. 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. 2011
installment income was $600,000 and will be collected over the next
three years. Scheduled collections and enacted tax rates for
2012–2014 are as follows:
2012 $150,000 30%
2013 250,000 40
2014 200,000 40
Pretax accounting income for 2011 was $810,000, which includes interest
revenue of $10,000 from municipal bonds. The enacted tax rate for 2011
is 30%.
Required:
1. Assuming no
differences between accounting income and taxable income other than
those described above, prepare the appropriate journal entry to record
Case’s 2011 income taxes.
2. What is Case’s 2011 net income?
3. How should the deferred tax amount be classified in a classified balance sheet?
