E19-12 - E19-12(Two Temporary Differences One Rate...

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E19-12 (Two Temporary Differences, One Rate,  Beginning Deferred Taxes, Compute Pretax  Financial Income) The following facts relate to Duncan  Corporation. 1. Deferred tax liability, January 1,  2012, $60,000. 2. Deferred tax asset, January 1, 2012,  $20,000. 3. Taxable income for 2012, $115,000. 4. Cumulative temporary difference at  December 31, 2012, giving rise to  future taxable amounts, $210,000. 5. Cumulative temporary difference at  December 31, 2012, giving rise to  future deductible amounts, $95,000. 6. Tax rate for all years, 40%. No  permanent differences exist. 7. The company is expected to  operate profitably in the future. (a) Compute the amount of pretax financial income for 2012.       $ 130,000 (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes paya   Description/Account Income Tax Expense Deferred Tax Asset        Income Tax Payable        Deferred Tax Liability (c)  
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