Exercise 19-2 Prepare the journal entry to record income tax expense, deferred i
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Question
Exercise 19-2
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming taxable income of $332,800. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Exercise 19-2
The following information is available for Wenger Corporation for 2013.1. Excess of tax depreciation over book depreciation, $48,000. This $48,000 difference will reverse equally over the years 2014–2017. 2. Deferral, for book purposes, of $30,500 of rent received in advance. The rent will be earned in 2014. 3. Pretax financial income, $357,800. 4. Tax rate for all years, 40%.
Explanation / Answer
a) Taxable Income
Particulars Amount
Pretax financial income= $357,800.
Rent received in advance=$30,500
Less:
Excess depreciation = $48,000
__________________________________
Taxable income = $340,300
_________________________________
b) Journal entry
Date Particulars LF Debit Credit
mm/dd/yy Income tax Expense A/c Dr $143,120
Deferred Asset Tax A/c Dr $17,000
To Income tax A/c $145,720
To Deferred tax liability $14,400
( Being ncome tax expense, deferred income taxes, and income taxes payable has recorded)
Explanation
Income tax = $357,800 *40/100=$143,120
Rent received in advance.
Deferred taxAsset = $30,500(unearned Revenue) *40/100=$12,200
Deferred Tax Asset = $48,000 /4(equally for 2014 to 2017)=12000 *40/100=$4,800
=$12,200+ $4,800=$17,000
Deferred Tax liability =$48,000 -12,000=$36,000*40/100=$14,400
________________________________________________________________
Date Particulars LF Debit Credit
mm/dd/yy Income tax Expense A/c Dr $143,120
Deferred Asset Tax A/c Dr $4,800
To Income tax A/c $138,320
To Deferred tax liability $9,600
( Being ncome tax expense, deferred income taxes, and income taxes payable has recorded)
Explanation
Income tax = $332,800 * 40/100=$143,120
Deferred Tax Asset = $48,000 /4(equally for 2014 to 2017)=12000 *40/100=$4,800
Deferred Tax liability =$48,000 -24,000(12,000* 2)=$24,000*40/100=$9,600
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