Exercise 19-4 Whispering Company reports pretax financial income of $74,100 for

Question

Exercise 19-4 Whispering Company reports pretax financial income of $74,100 for 2017. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $15,800 2. Rent collected on the tax return is greater than rent recognized on the income statement by $23,200 3. Fines for pollution appear as an expense of $11,000 on the income statement. whispering's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2017 Compute taxable income and income taxes payable for 2017. Taxable income Income taxes payable s SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit

Explanation / Answer

i) Calculation of Taxable Income and income taxes payable for 2017 (Amount in $)

Statement Showing Temporary and Permanent Differences :

Calculation of DTA and DTL : (Amount in $)

Journal Entries (Amount in $)

Whispering Company

   Income statement of 2017 (Partial) (Amount in $)

Computation of Effective Income Tax Rate :-

Pre Tax Financial Income 74,100 Less: Excess Depreciation allowed under Tax Return (15,800) Add: Excess Rent collected in tax return 23,200 Add: Fines for Pollution(disallowed as of illegal nature) 11,000 Taxable Income 92,500 Tax Rate 30% Income Taxes Payable (Taxable Income*Tax Rate) 27,750

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