Selected transactions of Divad Corporation during 2016 follo

Selected transactions of Divad Corporation during 2016 follow.

Filed the federal income tax return for 2015. The total tax for the year was $127,550. During 2015, quarterly deposits of estimated tax totaling $122,000 had been made. The additional tax of $5,550 was paid with the return. On December 31, 2015, the accountant had estimated the total tax for 2015 to be $125,800 and had recorded a liability of $3,800 for federal income tax payable.

Declared dividend of $0.30 per share on the 42,000 shares of common stock outstanding. The dividend is payable on June 2 to stockholders of record as of May 20, 2016.

Declared dividend of $0.30 per share on 42,000 shares of common stock outstanding. The dividend is payable on December 2 to holders of record on November 20.

Total income tax for 2016 was $136,960. Record as an adjustment the difference between this amount and the total quarterly deposits.

  

DATE	TRANSACTIONS
Mar.	15		Filed the federal income tax return for 2015. The total tax for the year was $127,550. During 2015, quarterly deposits of estimated tax totaling $122,000 had been made. The additional tax of $5,550 was paid with the return. On December 31, 2015, the accountant had estimated the total tax for 2015 to be $125,800 and had recorded a liability of $3,800 for federal income tax payable.
Apr.	15		Paid first quarterly installment of $34,000 on 2016 estimated federal income tax.
May	3		Declared dividend of $0.30 per share on the 42,000 shares of common stock outstanding. The dividend is payable on June 2 to stockholders of record as of May 20, 2016.
June	2		Paid dividend declared on May 3.
	15		Paid second quarterly installment of $34,000 on 2016 estimated federal income tax.
Sept.	15		Paid third quarterly installment of $34,000 on 2016 estimated federal income tax.
Nov.	2		Declared dividend of $0.30 per share on 42,000 shares of common stock outstanding. The dividend is payable on December 2 to holders of record on November 20.
Dec.	2		Paid dividend declared on November 2.
	15		Paid fourth quarterly installment of $34,000 on 2016 estimated income tax.
	31		Total income tax for 2016 was $136,960. Record as an adjustment the difference between this amount and the total quarterly deposits.

Solution

Date Journals Dr/Cr Debit Credit Mar-15 Provision for Income Tax/Income Tax Payable Dr 3800 Income Tax A/c Dr 1750 To Bank Cr 5550 (Since Provision is already made for 3800 on December Hence balance amount booked as Expense) Apr-15 Advance Tax A/c Dr 34000 To Bank Cr 34000 May-03 Profit and Loss A/c or Dividend A/c Dr 12600 To Dividend Payable Cr 12600 Jun-02 Dividend Payable Dr 12600 To Bank Cr 12600 Jun-15 Advance Tax A/c Dr 34000 To Bank Cr 34000 Sep-15 Advance Tax A/c Dr 34000 To Bank Cr 34000 Nov-02 Profit and Loss A/c or Dividend A/c Dr 12600 To Dividend Payable Cr 12600 Dec-02 Dividend Payable Dr 12600 To Bank Cr 12600 Dec-15 Advance Tax A/c Dr 34000 To Bank Cr 34000 Dec-31 Income Tax A/c Dr 136960 To Provision for Income Tax Cr 136960 Provision for Income Tax Dr 136960 To Advance Tax 136000 To Income Tax Payable 960