Exercise 19-8 2017 2018 2019 $799,000 $944,000 $951,000 (29,100 ) (39,300 ) (10,
ID: 2611250 • Letter: E
Question
Exercise 19-8
2017
2018
2019
$799,000
$944,000
$951,000
(29,100
)
(39,300
)
(10,200
)
19,500
9,800
8,100
$789,400
$914,500
$948,900
Account Titles and Explanation
Debit
Credit
2017
2018
2019
Exercise 19-8
Crane Company has the following two temporary differences between its income tax expense and income taxes payable.2017
2018
2019
Pretax financial income$799,000
$944,000
$951,000
Excess depreciation expense on tax return(29,100
)
(39,300
)
(10,200
)
Excess warranty expense in financial income19,500
9,800
8,100
Taxable income$789,400
$914,500
$948,900
The income tax rate for all years is 40%.
Explanation / Answer
Year
Account title and explanation
Debit
Credit
2017
Income tax expense(799,000*40%)
$319,600
Deferred tax asset(19,500*40%)
$7,800
Income tax payable(789,400*40%)
$315,760
deferred tax liability(29,100*40%)
$11,640
2018
Income tax expense(944,000*40%)
$377,600
Deferred tax asset(9,800*40%)
$3,920
Income tax payable(914,500*40%)
$365,800
deferred tax liability(39,300*40%)
$15,720
2019
income tax expense (951,000*40%)
$380,400
Deferred tax asset (8100*40%)
$3,240
Income tax payable(948,900*40%)
$379,560
deferred tax liability(10,200*40%)
$4,080
Year
Account title and explanation
Debit
Credit
2017
Income tax expense(799,000*40%)
$319,600
Deferred tax asset(19,500*40%)
$7,800
Income tax payable(789,400*40%)
$315,760
deferred tax liability(29,100*40%)
$11,640
2018
Income tax expense(944,000*40%)
$377,600
Deferred tax asset(9,800*40%)
$3,920
Income tax payable(914,500*40%)
$365,800
deferred tax liability(39,300*40%)
$15,720
2019
income tax expense (951,000*40%)
$380,400
Deferred tax asset (8100*40%)
$3,240
Income tax payable(948,900*40%)
$379,560
deferred tax liability(10,200*40%)
$4,080
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