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question deferred accounting january 1 20×1 taxcor collected 200 000for a four year 4280464

Question

Deferred Accounting: January 1, 20X1, Taxcor collected $200,000for a four year contract to provide lawn care maintenance servicewhich was recorded as unearned maintenance service revenues. UnderGAAP, the service revenues are recognized when earned, which willbe as $50,000 for each of the four years, 20X1 through 20X4. Underthe IRS (tax code), Taxcor will declare the entire fees ($200,000)as maintenance service revenues in 20X1. Taxcor reported net incomebefore taxes (GAAP or pre-tax accounting income) of $5,000,000 in20X1. Assume a tax rate of twenty percent for 20X1 through 20X4.REQUIRED: Prepare journal entries and calculate net income for20X1.

 

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