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Class21 - more problems

Class21 - more problems - E19-1 South Carolina Corporation...

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E19-1 South Carolina Corporation has one temporary difference at the end of 2007 that will reverse and cause taxable amounts of $55,000 in 2008, $60,000 in 2009, and $65,000 in 2010. South Carolina’s pretax financial income for 2007 is $300,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2007. Instructions a)Compute taxable income and income taxes payable for 2007. b)Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007.
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Ex. 19-1 INCOME: 2008 2009 2010 Financial income (GAAP) Temporary Diff. 55,000 60,000 65,000 Taxable income (IRS) 55,000 60,000 65,000 Tax rate 30% 30% 30% Income tax 16,500 18,000 19,500 Income Tax expense 90,000 Income Tax payable 36,000 Deferred tax liability 54,000
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Deferred Tax Liability 0 BB 2007 54,000 54,000 BB 2008 16,500 37,500 BB 2009 18,000 19,500 BB 2010 19,500 0 EB 2010
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Illustration Columbia Corporation has one temporary difference at the end of 2007 that will reverse and cause deductible amounts of $50,000 in 2008, $65,000 in 2009, and $40,000 in 2010. Columbia’s pretax financial income for 2007 is $200,000 and the tax rate is 34% for all years. There are no deferred taxes at the beginning of 2007.
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