Help Seve & Exin Zekany Corporation would have had identical income before taxes
ID: 2511917 • Letter: H
Question
Help Seve & Exin Zekany Corporation would have had identical income before taxes on both its income tax retums and income staternents for the years 20?through 2021 except for differences in depreciation on an cperatioral asset The asset cost SK000) and K deprecated tr ncome tax purposes in the following amounts 2018 $52,800 2019 70, 400 2020 24,000 2021 12,800 The operational asset has a four year life and no residual value. The straight-line method is used for financial reporting purposes Income amounts before depreciation expense and income taxes for each of the four years were as follows Accounting income before taxes and depreciation 590,000 $110,000 $100,000 $100,000 Assume the average and marginal income tax rate for 2018 and 2019 was 30% ho e er dring 2019 ta legslason was passed to ra e the tax rate to 40% beginning r 2020. The 40% rate re a ned n effect through the years 2020 and 2021 B h the accounting and income tax periods end December 31 Required Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) en ho w 3 4 5 6 7 8 9Explanation / Answer
Working Note for Computation of Income Tax Expense, Deffered Tax Liability 2018 2019 2020 2021 Less; Depreciaiton (160000/4) (b) $40,000 $40,000 $40,000 $40,000 Less Dep as per Taxation (a) 52800 70400 24000 12800 Tax rate 30% 40% 40% 40% Temporary Difference (a-b) $12,800 $30,400 -$16,000 -$27,200 DTL Bal at end $3,840 $12,160 -$6,400 $0 Dferred Tax Expense $3,840.00 $8,320.00 DTL Reversal $5,760 6400 Accounting Income Before Dep $90,000 $110,000 $100,000 $100,000 Less Dep as per Taxation 52800 70400 24000 12800 Taxable Income $37,200 $39,600 $76,000 $87,200 Tax Rate 30% 30% 40% 40% Income Tax Payable as per Taxable income $11,160 $11,880 $30,400 $34,880 Tax Expense $15,000.00 $20,200.00 $24,640.00 $28,480.00 . Journal Entry Date Account Desription , Title Debit Credit 2018 Income Tax Expense $15,000 Deffered Tax Expense $3,840 Income Tax Payable $11,160 To Record Income Tax Expense & DTL Created 2019 Income Tax Expense $20,200 Deffered Tax Expense $8,320 Income Tax Payable $11,880 To Record Income Tax Expense & DTL Reversal 2020 Income Tax Expense $24,640 Deffered Tax Expense $5,760 Income Tax Payable $30,400 To Record Income Tax Expense & DTL Reversal 2021 Income Tax Expense $28,480 Deffered Tax Expense $6,400 Income Tax Payable $34,880 To Record Income Tax Expense & DTL Reversal
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