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Required information [The following information applies to the questions displayed below.] Arndt, Inc., reported the following...

Question:

Required information [The following information applies to the questions displayed below.] Arndt, Inc., reported the followin6. Suppose that during 2019, tax legislation was passed that will lower Arndts effective tax rate to 35% beginning in 2020.Current Year 2019 Future Taxable Future Deductible (S in millions) Amounts [2020] Amounts [2020] Pretax accounting income PerJournal entry worksheet Record 2019 income taxes. Note: Enter debits before credits. Debit Event General Journal Credit Recor

Required information [The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 $ 983 $ 888 Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) 760 800 $ 128 $ 120 $ 183 $ 200 Tax rate: 40% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. b. Expenses include $2 million insurance premiums each year for life insurance on key executives. C. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $33 million and $35 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $25 million ($10 million collected in 2017 but not recognized as revenue until 2018) and $33 million, respectively. Hint: View this as two temporary differences-one reversing in 2018; one originating in 2018. d. 2018 expenses included a $17 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019. e. During 2017, accounting income included an estimated loss of $5 million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible. f. At January 1, 2018, Arndt had a deferred tax asset of $6 million and no deferred tax liability.
6. Suppose that during 2019, tax legislation was passed that will lower Arndt's effective tax rate to 35% beginning in 2020. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2019. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Suppose that during 2019, tax legislation was passed that will lower Arndt's effective tax rate to 35% beginning in 2020. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Current Year 2019 Future Taxable Future Deductible (S in millions) Amounts [2020] Amounts [2020] Pretax accounting income Permanent difference: Life insurance premiums Temporary differences: Casualty insurance (reversing) Subscriptions-2018 Subscriptions-2019 Unrealized loss (reversing) Taxable income (income tax return) Enacted tax rate Tax payable currently Deferred tax liability Deferred tax asset Deferred tax liability Deferred tax asset Ending balances (balances currently needed) Less: Beginning balances Changes needed to achieve desired balances < Required 1 Required 2 >
Journal entry worksheet Record 2019 income taxes. Note: Enter debits before credits. Debit Event General Journal Credit Record entry Clear entry View general journal

Answers

Future Taxable Amounts (2019) Future Deductible Amounts (2019) Current Year 2018 128] Pretax accounting income Permanent diffDebit Credit General Journal Income Tax Expense Deferred Tax asset Deferred Tax Liability Income Tax Payable 8 48

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