Gustav,Inc

question 95

Essay

Gustav,Inc.uses the accrual basis to account for all sales transactions.Sales for 2015 total $500,000.Included in this amount is $75,000 in receivables from sales on installment.Installment sales are considered revenue for book purposes,but not for tax purposes.Operating expenses total $150,000 and are treated the same for book and tax purposes.
Complete the following:
a.What is the book basis of the installment sales receivable?
b.What is the tax basis of the installment sales receivable?
c.Assuming a 30% tax rate,compute income tax expense,the deferred tax provision,and income tax payable for 2015.
d.Prepare the journal entry to record the 2015 income tax expense.

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Definitions:

Ambiguous

Something that can be understood or interpreted in more than one way, lacking clearness or definiteness.

Trustworthy

Refers to the ability to be relied on as honest or truthful.

Authentic

Genuine or real; not copied or false; true to one's own personality, spirit, or character.

Attractive

Having qualities that appeal to a sense of beauty or aesthetic preference.