Roberts Corp

Roberts Corp - $300,000 for unearned rent This was the only...

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Roberts Corp. reports pretax accounting income of $200,000, but due to a single temporary difference, taxable income is only $150,000. At the beginning of the year, no temporary differences existed. Roberts is subject to a tax rate of 40%. Required: Prepare the compound journal entry to record Roberts Corp.'s income taxes. Show welllabeled computations. Answer: Income tax expense (to balance) Deferred tax liability [($200,000 - $150,000) x 40%] Income tax payable ($150,000 x 40%) Learning Objective: 1 Level of Learning: 3 80,000 20,000 60,000 At the end of its first year of operations Prince Charming Corporation had a current liability of
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Unformatted text preview: $300,000 for unearned rent. This was the only difference between pretax accounting income and taxable income. Assume an income tax rate of 40%. Required: The tax liability for the tax return is $750,000. Prepare the journal entry to record income taxes for Prince Charming's first year of operations. Show well-labeled computations. Answer: Income tax expense (to balance) Deferred tax asset ($300,000 x 40%) Income tax payable (given) Learning Objective: 2 Level of Learning: 3 630,000 120,000 750,000...
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