Business, 01.06.2021 01:40, xarianna2007

Otis Worldwide began operations in 2021. The company sometimes sells used warehouses on an installment basis. In those cases, Otis reports income in its income statement in the year of the sale. In its income tax return, though, Otis reports installment income by the installment method. Installment income in 2021 was $90,000, which Otis expects to collect equally over the next three years. The tax rate is 25%, but based on an enacted law, is scheduled to become 30% in 2023. Otis's pretax accounting income from the 2021 income statement was $830,000, which includes $40,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above.

Required:
a. Prepare the appropriate journal entry to record Otis's 2021 income taxes. Show calculations.
b. What is Otis's 2021 net income?

Answers: 3

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Otis Worldwide began operations in 2021. The company sometimes sells used warehouses on an installme...