The information that follows pertains to Esther Food Products: a. At December 31

Question

The information that follows pertains to Esther Food Products: a. At December 31, 2016, temporary differences were associated with the following future taxable (deductible) amounts Depreciation Prepaid expenses Warranty expenses 54,000 23,000 (20,000) b. No temporary differences existed at the beginning of 2016 c. Pretax accounting income was $77,000 and taxable income was $20,000 for the year ended December 31, 2016 d. The tax rate is 40% Required: Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2016. (lf no entry is required for a transaction/event, select "No journal entry required" in the first account field. Negative amounts should be entered with a minus sign.) x Tax Rate Tax $ Recorded as: Pretax accounting income $77,000 Permanent differences Income subject to taxation 77,000 x lemporary Difterences Income taxable in current year $77,000 x

Explanation / Answer

Answer:-

Explanation :-

1. Deferred tax asset = ($20000 × 40%) = $8000

2. Deferred tax liability = ($77000 × 40%) = $30800

3. Income Tax Payable = ($20000 × 40%) = $8000

× Tax Rate = Tax ($) Recorded as Pretax Accounting Income $77000 Temporary Differences: Depreciation ($54000) 40% $21600 Deferred Tax Liability Prepaid Expenses ($23000) 40% $9200 Deferred tax liability Warranties $20000 40% $8000 Deferred tax Asset Income Taxable in current year $20000 40% $8000 Income tax Payable

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.