Windsor Corporation has provided the following information for the year ended December 31, 2020. Windsor Corporation Inc
Posted: Fri Mar 04, 2022 9:36 am
Windsor Corporation has provided the following information for
the year ended December 31, 2020. Windsor Corporation Income
Statement For the Year Ended December 31, 2020 Revenue Service
Revenue 102,500 Dividend Revenue 11,000 $113,500 Operating Expenses
Supplies Expense 2,200 Depreciation Expense 20,900 Advertising
Expense 1,000 Meals and Entertainment Expense 6,000 Rent Expense
9,400 Litigation Expense 8,300 Salaries and Wages Expense 40,600
Warranty Expense 4,100 92,500 Operating Income before income tax
$21,000 Additional Information: 1. Windsor is privately owned, and
uses ASPE. The dividend revenue represents dividends received from
taxable Canadian corporations. 2. Windsor’s income tax rate is 30%.
3. On January 1, 2020, Windsor had a future tax liability of $3,135
related to its property, plant, and equipment (PPE). 4. During the
year warranty expense of $4,100 was accrued. One half of this
amount was paid during 2020. This is the first year Windsor offers
warranties on services rendered. 5. Property, plant, and equipment
was purchased for $104,500 on January 1, 2019. These assets are
being depreciated on a straight-line basis over five years with no
residual value and have a 20% CCA rate. This PPE is considered
“eligible equipment” for purposes of the Accelerated Investment
Incentive (the “AII”) (under the AII, instead of using the
half-year rule, companies are allowed a first-year deduction using
1.5 times the standard CCA rate). 6. On July 1, Windsor was sued by
a competitor. Although the lawsuit has not been finalized,
management believes that it is likely that a settlement will be
reached in the next year for $8,300. 7. On November 30, $4,000 cash
was paid in advance for four months of advertising, starting Dec.
1. Calculate taxable income and taxes payable for 2020. Taxable
Income $ Taxes Payable $ Prepare the journal entries to record 2020
income taxes (current and future). (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.) Account Titles and
Explanation Debit Credit (To record current tax expense.) (To
record future tax expense.) Explain how the future tax amounts will
be shown on the balance sheet. Noncurrent Future Tax Liability $
Current Future Tax Asset $
the year ended December 31, 2020. Windsor Corporation Income
Statement For the Year Ended December 31, 2020 Revenue Service
Revenue 102,500 Dividend Revenue 11,000 $113,500 Operating Expenses
Supplies Expense 2,200 Depreciation Expense 20,900 Advertising
Expense 1,000 Meals and Entertainment Expense 6,000 Rent Expense
9,400 Litigation Expense 8,300 Salaries and Wages Expense 40,600
Warranty Expense 4,100 92,500 Operating Income before income tax
$21,000 Additional Information: 1. Windsor is privately owned, and
uses ASPE. The dividend revenue represents dividends received from
taxable Canadian corporations. 2. Windsor’s income tax rate is 30%.
3. On January 1, 2020, Windsor had a future tax liability of $3,135
related to its property, plant, and equipment (PPE). 4. During the
year warranty expense of $4,100 was accrued. One half of this
amount was paid during 2020. This is the first year Windsor offers
warranties on services rendered. 5. Property, plant, and equipment
was purchased for $104,500 on January 1, 2019. These assets are
being depreciated on a straight-line basis over five years with no
residual value and have a 20% CCA rate. This PPE is considered
“eligible equipment” for purposes of the Accelerated Investment
Incentive (the “AII”) (under the AII, instead of using the
half-year rule, companies are allowed a first-year deduction using
1.5 times the standard CCA rate). 6. On July 1, Windsor was sued by
a competitor. Although the lawsuit has not been finalized,
management believes that it is likely that a settlement will be
reached in the next year for $8,300. 7. On November 30, $4,000 cash
was paid in advance for four months of advertising, starting Dec.
1. Calculate taxable income and taxes payable for 2020. Taxable
Income $ Taxes Payable $ Prepare the journal entries to record 2020
income taxes (current and future). (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts.) Account Titles and
Explanation Debit Credit (To record current tax expense.) (To
record future tax expense.) Explain how the future tax amounts will
be shown on the balance sheet. Noncurrent Future Tax Liability $
Current Future Tax Asset $