And taxable income for 2012 is 400000 instructions

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, and taxable income for 2012 is $400,000 Instructions: Taxable income for 2012 Amount Enacted tax rate Percentage Income tax payable for 2012 Formula Future Years 2013 2014 Total Future taxable (deductible) amounts Amount Amount Formula Tax Rate Percentage Percentage Deferred tax liability (asset) Formula Formula Formula Deferred tax liability at the end of 2012 Amount Title Amount Title Formula Title Formula Title Formula Account Title Amount Account Title Amount Account Title Amount Income before income taxes Amount Income tax expense Title Formula Title Formula Formula Title Formula Pretax financial income Amount Title Amount Title Formula Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse Taxes) Brennan Corporation began 2012 with a (a) Compute income taxes payable for 2012. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2012. (c) Prepare the income tax expense section of the income statement for 2012, beginning with the line "Income before income taxes." Note to instructor: Because of the flat tax rate for all years, the amount of cumulative temporary difference existing at the beginning of the year can be calculated by dividing $90,000 by 40%, which equals $225,000. The difference between the $225,000 cumulative temporary difference at the beginning of 2012 and the $350,000 cumulative temporary difference at the end of 2012 represents the net amount of temporary difference originating during 2012 (which is $125,000). With this information, we can reconcile pretax financial income with taxable income as follows:
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63b2d62cb17dc30d8a404a4512332808c1ecc5bc.xlsx, Problem 19-1 Solution, Page 5 of 8, 03/29/2012, 01:32:32 Name: Solution Date: Instructor: Course: 1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $120,000 This difference will reverse in equal amounts of $30,000 over the years 2013-2016. 2. Interest received on municipal bonds was $10,000 3. Rent collected in advance on January 1, 2012, totaled $60,000 for a 3-year period. Of this amount, $40,000 was reported as unearned at December 31, for book purposes. 4. The tax rates are 40% for 2012 and 35% for 2013 and subsequent years. 5. Income taxes of $320,000 are due per the tax return for 2012. 6. No deferred taxes existed at the beginning of 2012. Instructions: A = Net Income, B = Tax Rate, C = Income Tax, A × B = C, C / B = A A × 40% = $320,000 $320,000 / 40% = A A = $800,000 = Taxable income for 2012 Taxable income from part (a) $800,000 Excess depreciation 120,000 Municipal interest 10,000 Unearned rent (40,000) Pretax financial income for 2012 $890,000 payable for 2012 and 2013. Assume taxable income was $980,000 in 2013. 2012 Income Tax Expense ($320,000 + $42,000 - $14,000) 348,000 Deferred Tax Asset ($40,000 × 35%) 14,000 Income Tax Payable ($800,000 × 40%) 320,000 Deferred Tax Liability ($120,000 × 35%) 42,000 2013 Income Tax Expense ($343,000 + $7,000 - $10,500) 339,500 Deferred Tax Liability [($120,000 / 4) × 35%] 10,500 Income Tax Payable ($980,000 × 35%) 343,000 Deferred Tax Asset [($40,000 / 2) × 35%] 7,000 Income before income taxes $890,000 Income tax expense Current $320,000 Deferred ($42,000 – $14,000) 28,000 348,000 Net income $542,000 Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
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