The following information is for James Industries\' first year of operations. Am
ID: 2472352 • Letter: T
Question
The following information is for James Industries' first year of operations. Amounts are in millions of dollars.
Year
Future Taxable Amounts
Future
Amounts
2015
2016
2017
2018
2019
Total
Accounting income
$60
Temporary difference:
Advance rent payment
(12)
$3
$3
$3
$3
$12
Taxable income
$48
In 2016 the company's pretax accounting income was $67. The enacted tax rate for 2015 and 2016 is 40%, and it is 35% for years after 2016.
Required:
Prepare a journal entry to record the income tax expense for the year 2016. Show well-labeled computations for income tax payable and the change in the deferred tax account.
Year
Future Taxable Amounts
Future
Amounts
2015
2016
2017
2018
2019
Total
Accounting income
$60
Temporary difference:
Advance rent payment
(12)
$3
$3
$3
$3
$12
Taxable income
$48
Explanation / Answer
The entry for the income tax payable will be as under
Income tax exp dr $ 24.5
Income tax payable cr $ 24.5
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