Button Company has the following two temporary differences between its income ta
ID: 2420942 • Letter: B
Question
Button Company has the following two temporary differences between its income tax expense and income taxes payable. 2014 2015 2016 Pretax financial income $853,100 $929,600 $953,800 Excess depreciation expense on tax return (37,100 ) (49,700 ) (22,100 ) Excess warranty expense in financial income 25,800 12,600 9,270 Taxable income $841,800 $892,500 $940,970 The income tax rate for all years is 40%. Incorrect answer. Your answer is incorrect. Try again. Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2014, 2015, and 2016. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit 2014 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer 2015 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer 2016 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Partially correct answer. Your answer is partially correct. Try again. Assuming there were no temporary differences prior to 2014, indicate how deferred taxes will be reported on the 2016 balance sheet. Button’s product warranty is for 12 months. Button Company Balance Sheet 2016 Entry field with correct answer Entry field with incorrect answer $Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer $Entry field with incorrect answer
Explanation / Answer
2014
Income tax expense = Pretax financial Income*tax rate
Income tax expense = 853100*40%
Income tax expense = 341,240
Deffered Tax = Timming Difference*Tax rate
Deffered Tax = (37100-25800)*40%
Deffered Tax = 4520
Income Tax Payable = Taxable Income * Tax rate
Income Tax Payable = 841800*40%
Income Tax Payable = $ 336,720
2015
Income tax expense = Pretax financial Income*tax rate
Income tax expense = 929600*40%
Income tax expense = 371840
Deffered Tax = Timming Difference*Tax rate
Deffered Tax = (49700-12600)*40%
Deffered Tax = 14,840
Income Tax Payable = Taxable Income * Tax rate
Income Tax Payable = 892500*40%
Income Tax Payable = $ 357000
2016
Income tax expense = Pretax financial Income*tax rate
Income tax expense = 953800*40%
Income tax expense = 381520
Deffered Tax = Timming Difference*Tax rate
Deffered Tax = (22100-9270)*40%
Deffered Tax = 5132
Income Tax Payable = Taxable Income * Tax rate
Income Tax Payable = 940970*40%
Income Tax Payable = $ 376,388
Deferred taxes will be reported on the 2016 balance sheet = 4520 + 14840 + 5132
Deferred taxes will be reported on the 2016 balance sheet = $ 24,492
2014 2015 2016 Pretax financial income 853100 929600 953800 Excess depreciation expense on tax return -37100 -49700 -22100 Excess warranty expense in financial income 25800 12600 9270 Taxable income 841800 892500 940970Related Questions
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