A company reports pretax accounting income of $18 million, but because of a sing

Question

A company reports pretax accounting income of $18 million, but because of a single temporary difference, taxable income is $20 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 an 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).)

A company reports pretax accounting income of $18 million, but because of a single temporary difference, taxable income is $20 million. No temporary differences existed at the beginning of the year, and the tax rate is 40%.

Explanation / Answer

Income Taxes (Debit)- $8 million

Income Tax payable(Credit)- $8 million

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