P19-7 Part A - P19-7(LO 2 5 7(One Temporary Difference...

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P19-7 (One Temporary Difference, Tracked 3 Years, Change in Rates, Income Statement was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 35% in 2006, and 30% in 2007 and 2008. The 30% tax rate was not enacted in law until 2007. The accounting and tax data for the 3 years is shown below. 2006 35% tax rate Financial Accounting Tax Return Income before temporary difference 70,000 70,000 Temporary difference 60,000 20,000 Income 130,000 90,000 2007 30% tax rate Income before temporary difference 70,000 70,000 Temporary difference –0– 20,000 Income 70,000 90,000 2008 30% tax rate Income before temporary difference 70,000 70,000 Temporary difference –0– 20,000 Income 70,000 90,000 Instructions 1 Prepare the journal entries to record the income tax expense, deferred income taxes, and
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This note was uploaded on 08/14/2011 for the course ACCT 423 taught by Professor R.becksted during the Spring '09 term at University of Phoenix.

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P19-7 Part A - P19-7(LO 2 5 7(One Temporary Difference...

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