E19-3 - 1 Taxable Income for 2007 $ 405,00 0 Enacted Tax...

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E19-3 (LO 2 , 5 ) (One Temporary Difference, Future Taxable Amounts, One Rate, Beginning Deferred Taxes) Bandung Corporation began 2007 with a $92,000 balance in the Deferred Tax Liability account. At the end of 2007, the related cumulative temporary difference amounts to $350,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2007 is $525,000, the tax rate for all years is 40%, and taxable income for 2007 is $405,000. Instructions 1. Compute income taxes payable for 2007. 2. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007. 3. Prepare the income tax expense section of the income statement for 2007 beginning with the line “Income before income taxes.” SOLUTIONS
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Unformatted text preview: 1 Taxable Income for 2007 $ 405,00 0 Enacted Tax Rate 40% Income Tax payable for 2007 $ 162,00 0 Future Years 2008 2009 Total 2 Future Taxable (detuctable) amounts $175,00 0 $175,00 0 $350,0 00 Tax Rate 40% 40% Deferred Tax Liability (asset) $70,000 $70,000 $140,0 00 Deferred tax liability at the end of 2007 $140,0 00 Deferred tax liability at the beginning of 2007 92,000 Deferred tax expense for 2007 (increase required in deferred tax liability) 48,000 Current tax expense for 2007 162,00 Income tax expense for 2007 $210,0 00 Income Tax Expense 210,000 Income Tax Payable 162,00 Deferred Tax Liability 48,000 3 Income before income taxes $525,0 00 Income Tax Expense Current $162,00 0 Deferre d 48,000 210,00 Net Income $315,0 00...
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E19-3 - 1 Taxable Income for 2007 $ 405,00 0 Enacted Tax...

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