Oriole Company, which began operations at the beginning of 2018, produces various products on a contract basis. Each contract generates a gross profit of $82,000. Some of Oriole’s contracts provide for the customer to pay on an installment basis. Under these contracts, Oriole collects one-fifth of the contract revenue in each of the following four years. For financial reporting purposes, the company recognizes gross profit in the year of completion (accrual basis). For tax purposes, Oriole recognizes gross profit in the year cash is collected (installment basis). Presented below is information related to Oriole’s operations for 2020: 1. In 2020, the company completed seven contracts that allow for the customer to pay on an installment basis. Oriole recognized the related gross profit of $574,000 for financial reporting purposes. It reported only $114,800 of gross profit on installment sales on the 2020 tax return. The company expects future collections on the related installment receivables to result in taxable amounts of $114,800 in each of the next four years. 2. In 2020, nontaxable municipal bond interest revenue was $29,600. 3. During 2020, nondeductible fines and penalties of $28,100 were paid. 4. Pretax financial income for 2020 amounts to $510,000. 5. Tax rates (enacted before the end of 2020) are 30% for 2020 and 20% for 2021 and later. 6. The accounting period is the calendar year. 7. The company is expected to have taxable income in all future years. 8. The company has no deferred tax assets or liabilities at the end of 2019. Extracted text: (a) Prepare the journal entry to record income taxes for 2020. (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 eTextbook and Media Assistance Used List of Accounts Save for Later Attempts: 0 of 3 used Submit Answer

Oriole Company, which began operations at the beginning of 2018, produces various products on a contract basis. Each contract generates a gross profit of $82,000. Some of Oriole’s contracts provide...

Oriole Company, which began operations at the beginning of 2018, produces various products on a contract basis. Each contract generates a gross profit of $82,000. Some of Oriole’s contracts provide for the customer to pay on an installment basis. Under these contracts, Oriole collects one-fifth of the contract revenue in each of the following four years. For financial reporting purposes, the company recognizes gross profit in the year of completion (accrual basis). For tax purposes, Oriole recognizes gross profit in the year cash is collected (installment basis).

Presented below is information related to Oriole’s operations for 2020:

1.		In 2020, the company completed seven contracts that allow for the customer to pay on an installment basis. Oriole recognized the related gross profit of $574,000 for financial reporting purposes. It reported only $114,800 of gross profit on installment sales on the 2020 tax return. The company expects future collections on the related installment receivables to result in taxable amounts of $114,800 in each of the next four years.
2.		In 2020, nontaxable municipal bond interest revenue was $29,600.
3.		During 2020, nondeductible fines and penalties of $28,100 were paid.
4.		Pretax financial income for 2020 amounts to $510,000.
5.		Tax rates (enacted before the end of 2020) are 30% for 2020 and 20% for 2021 and later.
6.		The accounting period is the calendar year.
7.		The company is expected to have taxable income in all future years.
8.		The company has no deferred tax assets or liabilities at the end of 2019.

(a)<br>Prepare the journal entry to record income taxes for 2020. (Credit account titles are automatically indented when the amount is<br>entered. Do not indent manually. If no entry is required, select

Extracted text: (a) Prepare the journal entry to record income taxes for 2020. (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 eTextbook and Media Assistance Used List of Accounts Save for Later Attempts: 0 of 3 used Submit Answer

Jun 10, 2022

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