Reference no: EM132969679

For the year ended December 31, 2020, CulverLtd. reported income before income taxes of $196,900. Prior to 2020 taxable income and accounting income was the same each year.

• In 2020, CulverLtd. paid $117,600 for advertising; of this amount, $39,200 was expensed in 2020. The remaining $78,400 was treated as a prepaid expense for accounting purposes and would be expensed equally over the 2021-2022 period. The full $117,600 was deductible for tax purposes in 2020.
• The company paid $28,300 in 2020 for membership in a local golf club (which was not deductible for tax purposes).
• In 2020 CulverLtd. began offering a 1-year warranty on all merchandise sold. Warranty expenses for 2020 were $23,900, of which $18,600 was actual repairs for 2020 and the remaining $5,300 was estimated repairs to be completed in 2021.
• Meal and entertainment expenses totalled $42,600 in 2020, only half of which were deductible for income tax purposes.
• Depreciation expense for 2020 was $101,900. Capital Cost Allowance (CCA) claimed for the year was $130,100. Depreciation and CCA relate to an asset that was purchased on January 1, 2020 for $509,500.
• Culverwas subject to a 25% income tax rate for 2020. Culverfollows IFRS.

Problem 1: Calculate taxable income and taxes payable for 2020.

Problem 2: Prepare the journal entries to record 2020 income taxes (current and deferred). (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.)