he information that follows pertains to Julia Company: (a.) Temporary difference
ID: 2491740 • Letter: H
Question
he information that follows pertains to Julia 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 $62,000 Prepaid expense 8,200 Expenses reported in the income statement, but not deducted in the tax return: Warranty expense 9,200 (b.) No temporary differences existed at the beginning of 2016. (c.) Pretax accounting income was $69,200 and taxable income was $8,200 for 2016. (d.) There were no permanent differences. (e.) The tax rate is 30%. Required: Prepare the journal entry to record the tax provision for 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Explanation / Answer
Dr Income tax expense (to balance) 20,760
Dr Deferred tax asset ($9,200 x 30%) 2,760
Cr Deferred tax liability ($70,200 x 30%) 21,060
Cr Income tax payable ($8,200 x 30%) 2,460
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