2007-07-08_150917_WEEK4_INDIVIUDAL_ASSIGNMENTS

2007-07-08_150917_WEEK4_INDIVIUDAL_ASSIGNMENTS - E19-3 (One...

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E19-3 (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 (a) Compute income taxes payable for 2007. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007. (c) Prepare the income tax expense section of the income statement for 2007 beginning with the line “Income before income taxes.” ACCOUNTING ENTRY: Deferred tax liability 48,000 Income tax payable 162,000 Income tax provision (plug) 210,000 NOTE: 210,000 is 40% of the FINANCIAL income of $525,000. Balance Sheet Income Statement 2007 2007 Assets: Assets: Expenses: Liabilities: Income tax payable 162,000 Income before tax: 525,000 Deferred tax liability 48,000 Inceome tax expense 21,000 Equity: Retained earnings 315,000 Net Income (loss) 315,000
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E19-6 (Identify Temporary or Permanent Differences) Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. Instructions For each item below, indicate whether it involves: (1) A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. (2) A temporary difference that will result in future taxable amounts and, therefore, will usually give
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2007-07-08_150917_WEEK4_INDIVIUDAL_ASSIGNMENTS - E19-3 (One...

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