E19-21 - E19-21(Two Temporary Differences Multiple Rates...

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E19-21 (Two Temporary Differences, Multiple Rates, Future Taxable Income) Flynn Inc. has two temporary differences at the end of 2012. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Flynn's accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 2013 2014 2015 2016 Taxable amounts $40,000 $50,000 $60,000 $90,000 Deductible amounts (15,000) (19,000) $40,000 $35,000 $41,000 $90,000 As of the beginning of 2012, the enacted tax rate is 34% for 2012 and 2013, and 38% for 2014- 2017. At the beginning of 2012, the company had no deferred income taxes on its balance sheet. Taxable income for 2012 is $400,000. Taxable income is expected in all future years. (a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payab amount, e.g. 10, 5, 2.) Description/Account Income Tax Expense Deferred Tax Asset Income Tax Payable Deferred Tax Liability (b) Indicate how deferred incom end of 2012.
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