The records for Oxtongue Inc. show the following data for calendar 2020: a) Gross profit...
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Accounting
The records for Oxtongue Inc. show the following data for calendar 2020: a) Gross profit on instalment sales recorded on the books was $100,000. Gross profit from collections of instalment receivables was $50,000. b) Golf club dues were $3,800. c) Machinery was acquired in January 2020 for $300,000. Oxtongue uses straight-line depreciation over a ten-year life (no residual value). For tax purposes, Oxtongue uses CCA at 14% for 2020 after considering the half-year rule. d) Dividends received from a Canadian corporation were $ 4,000. e) The estimated warranty liability related to 2020 sales was $19,600. Warranty repair costs paid during 2020 were $13,600. The remainder will be paid in 2021. f) Pre-tax accounting income is $250,000. The enacted income tax rate is 25%.
Required a. Prepare a schedule (starting with pre-tax accounting income) to calculate taxable income.
Explain what a taxable temporary difference is and why a deferred tax liability is recognized.
can you please send me typed answer.
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