Music Media Ltd. prepares statements quarterly. Part A: Required: 1. Based on 2019...
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Accounting
Music Media Ltd. prepares statements quarterly.
Part A:
Required: 1. Based on 2019 results, Musics estimated tax liability for 2020 is $312,960. Music will accrue 1/21 of this amount at the end of each month (assume the installments are paid the next day). Prepare the entry on January 31, 2020, to accrue the tax liability and on February 1 to record the payment.
2. At year-end, December 31, the actual income tax for 2020 was determined to be $318,420. Prepare the adjusting entry on December 31 to record the accrual (assume 11 months have been accrued to date in 2020). Record the payment on January 1, 2021.
Part B:
Required: 3. Complete the following table assuming Music estimates its tax liability for the year 2020 to be $657,000. (Do not round intermediate calculations.)
4. Assuming that actual tax for the year 2020 was determined to be $742,000, prepare the appropriate adjusting entry at year-end to bring the balance in the Income Tax Expense account to the correct balance, assuming no accrual has yet been recorded for the fourth quarter.
5. Calculate Musics actual profit for the year 2020.
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