a. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dec. 31 Income Tax Expense N/A Income Tax Payable Deferred Tax Liability To record income tax expense Dr. Cr. 60,000 0 0 0 46,000 14,000 b. Prepare the income tax section of the income statement for the year and provide the disclosure of current and deferred tax expense. •Note: Do not use negative signs with your answers.
a. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dec. 31 Income Tax Expense N/A Income Tax Payable Deferred Tax Liability To record income tax expense Dr. Cr. 60,000 0 0 0 46,000 14,000 b. Prepare the income tax section of the income statement for the year and provide the disclosure of current and deferred tax expense. •Note: Do not use negative signs with your answers.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
Related questions
Question
Transcribed Image Text:On December 31, for GAAP purposes, Clubs Inc. reported a balance of $56,000 in Prepaid Maintenance Expense for services to be received over the following year. For tax purposes, however, prepaid costs are deducted when
paid. Taxable income is $184,000 and the tax rate is 25%. Assume no other temporary differences or any beginning balances in deferred tax accounts.
Required
a. Record the income tax journal entry on December 31.
•Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
Date
Account Name
Dec. 31 Income Tax Expense
N/A
Income Tax Payable
Deferred Tax Liability
To record income tax expense
Dr.
Cr.
60,000
0
0
0
0
46,000 ▼
0
14,000
b. Prepare the income tax section of the income statement for the year and provide the disclosure of current and deferred tax expense.
•Note: Do not use negative signs with your answers.
Partial Income Statement
For the year ended December 31
Income before income taxes $
240,000
Income tax expense
$
60,000
Net income
$
180,000
Financial Statement Disclosure
Year 1
Current tax expense
$
0 x
Deferred tax expense
$
Total income tax expense
$
0 x
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning