The following information is for James Industries\' first year of operations. Am
ID: 2474710 • Letter: T
Question
The following information is for James Industries' first year of operations. Amounts are in millions of dollars. 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.
2015 2016 2017 2018 2019 Future Amounts Accounting Income 60 Temp difference: Advance rent payment (12) 3 3 3 3 $12 Taxable Incoime $48Explanation / Answer
Computation of taxable income :
2016 Companies pretax income = $ 67
Add: Advance rent = $ 3
Taxable income = $ 70
Profit & loss a/c Dr 70
Income tax expense Cr 70
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