The following information is available for Sage Corporation for 2016 (its first
ID: 2546570 • Letter: T
Question
The following information is available for Sage Corporation for 2016 (its first year of operations).
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016.
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming taxable income of $345,800.
1. Excess of tax depreciation over book depreciation, $42,400. This $42,400 difference will reverse equally over the years 2017–2020. 2. Deferral, for book purposes, of $20,300 of rent received in advance. The rent will be recognized in 2017. 3. Pretax financial income, $272,300. 4. Tax rate for all years, 30%.Explanation / Answer
Account Tittles and Explanation Debit Credit Income tax Expense(1) 113280 Deferred Tax Asset(2) Nil Deferred TAX liability(3) 9540 Income tax Payable (4) 103740 4- Income tax payable = 345800*30% 3-42400is for 4years so for 3years 3*42400/4= 31800 31800*0.3=9540 2- rent is recognised so no need for deferred tax asset 1- this is the balancing fig sum of deferred tax liability and income tax payable
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.