On July 1, 2015, Ealys Jewellers Accepted a 3-Month, 15

question 98

Essay

On July 1, 2015, Ealys Jewellers accepted a 3-month, 15% note for $6,000 in settlement of an overdue account receivable. Provide the journal entry to record the acceptance of the note.

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Definitions:

Permanent Differences

These are differences between taxable income and accounting income that will not reverse in future periods.

Interperiod Income Tax Allocation

The process of allocating income taxes over various accounting periods because of temporary differences that cause taxable income to differ from accounting income.

Deferred Tax

An accounting concept referring to a temporary difference between the tax expense shown in the income statement and the tax payable to the tax authorities, due to timing or methodological differences in recognizing revenue and expenses.

Income Tax Expense

The amount of money that a company or individual owes to the government based on their taxable income.