he information that follows pertains to Esther Food Products: At December 31, 20
ID: 2518908 • Letter: H
Question
he information that follows pertains to Esther Food Products:
At December 31, 2018, temporary differences were associated with the following future taxable (deductible) amounts:
No temporary differences existed at the beginning of 2018.
Pretax accounting income was $77,000 and taxable income was $20,000 for the year ended December 31, 2018.
The tax rate is 40%.
Required:
Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2018.
1.
Complete the following table given below to record income taxes for 2018. (Negative amounts should be entered with a minus sign.)
2. Record 2018 income taxes.
Depreciation $ 54,000 Prepaid expenses 23,000 Warranty expenses (20,000 )Explanation / Answer
2)
* Tax Rate = Tax Recorded as Pretax accounting income 77000 * 40% = 30800 Income tax expense permanent difference 0 Income subject to taxation 77000 * 40% = 30800 Income tax expense Temporary difference Depreciation 54000 * 40% = 21600 Deferred tax liability Prepaid expenses 23000 * 40% = 9200 Deferred tax liability warranty expense 20000 * 40% = (8000) deferred tax asset Income taxable in current year 20000 * 40%` = 8000 Income tax payableRelated Questions
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