Alsup Consulting sometimes performs services for which itreceives payment at the conclusion of the engagement, up to sixmonths after services commence. Alsup recognizes service revenuefor financial reporting purposes when the services are performed.For tax purposes, revenue is reported when fees are collected.Service revenue, collections, and pretax accounting income for2017–2020 are as follows:
| Service Revenue | Collections | Pretax Accounting
Income |
| 2017 | $ | 616,000 | | $ | 581,000 | | $ | 140,000 | |
| 2018 | | 700,000 | | | 710,000 | | | 205,000 | |
| 2019 | | 665,000 | | | 645,000 | | | 175,000 | |
| 2020 | | 650,000 | | | 675,000 | | | 155,000 | |
|
There are no differences between accounting income and taxableincome other than the temporary difference described above. Theenacted tax rate for each year is 40%.
(Hint: You may find it helpful to prepare a schedule that shows thebalances in service revenue receivable at December 31,2017–2020.)
Journal entry worksheet:
Record 2018 income taxes.
Record 2019 income taxes.
Record 2020 income taxes.
