A company reports pretax accounting income of $10 million, but because of a sing

Question

A company reports pretax accounting income of $10 million, but because of a single temporary difference, taxable income is only $7 million. No temporary differences existed at the beginning of the year, and the tax rate is 40%.

Prepare the appropriate journal entry to record income taxes. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Explanation / Answer

ournal Entries
Income tax expense.............$4,0000,000

Deferred tax liability(10m-7m)*40%........$1,200,00

Income tax payable(7m*40%)................$2,800,000

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