Question The information that follows pertains to the Company: Pretax accounting

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The information that follows pertains to the Company:

Pretax accounting income was $67000 and taxable income was $8000 for 2016.

Prepare the journal entry to record the tax provision for 2016.provide supporting computations

The information that follows pertains to the Company:

(a.) Temporary differences for the year 2016 are summarized below. Expenses deducted in the tax return, but not included in the income statement: Depreciation        $55,000 Prepaid expense     7,000 Expenses reported in the income statement, but not deducted in the tax return: Warranty expense    9500 (b.) No temporary differences existed at the beginning of 2016. (c.)

Pretax accounting income was $67000 and taxable income was $8000 for 2016.

(d.) There were no permanent differences. (e.) The tax rate is 30%.

Explanation / Answer

Income tax expense (to balance) $18,150 Deferred tax asset (9500 x 30% $ 2,850            Deferred tax liability (55000+7000) x 30% $     18,600            Income tax payable ( 8000 x 30%) $       2,400

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