The DeVille Company reported pretax accounting income on its income statement as

Question

The DeVille Company reported pretax accounting income on its income statement as follows:
   

   
Included in the income of 2018 was an installment sale of property in the amount of $38,000. However, for tax purposes, DeVille reported the income in the year cash was collected. Cash collected on the installment sale was $15,200 in 2019, $19,000 in 2020, and $3,800 in 2021.

Included in the 2020 income was $14,000 interest from investments in municipal bonds.

The enacted tax rate for 2018 and 2019 was 30%, but during 2019 new tax legislation was passed reducing the tax rate to 25% for the years 2020 and beyond.

Required:
Prepare the year-end journal entries to record income taxes for the years 2018–2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2018 $ 375,000 2019 295,000 2020 365,000 2021 405,000

Explanation / Answer

Explanation:

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Date General Journal Debit Credit Dec. 31, 2018 Income tax expense $112,500 Deferred tax liability $11,400 Income tax payable $101,100 Dec. 31, 2019 Income tax expense $87,360 Deferred tax liability $5,700 Income tax payable $93,060 Dec. 31, 2020 Income tax expense $87,750 Deferred tax liability $4,750 Income tax payable $92,500 Dec. 31, 2021 Income tax expense $101,250 Deferred tax liability $950 Income tax payable $102,200

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