Bateman Light began operations in 20X1. The company sometimes sells used warehouses on an instalment basis. In those cases, Bateman Light reports income in its income statement in the year of the sale, In its income tax return, though Bateman Light reports instalment income by the instalment method. Instalment method. Installment income in 20X1 wass $90,000 which Bateman Light expects to collect equally over the next three years (20X2, 20X3, and 20X4). The tax rate is 22% but based on an enacted law, is scheduled to become 25% in 20X3.
Bateman Light's pretax accounting income from the 20X1 income statement was $830,000, which includes $40,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above.
Bateman Light's pretax accounting income from the 20x2 income statement was $900,000.
Required: Calculate taxable income for 20X1 and 20X2.
Prepare appropriate journal entries for 20X1 and 20X2.
Calculate net income (after taxes) for 20X1 and 20X2.