PROBLEM: The information that follows pertains to Julia Company: (a.) Temporary

Question

PROBLEM:

The information that follows pertains to Julia Company:
(a.) Temporary differences for the year 2013 are summarized below.
Expenses deducted in the tax return, but not included in the income statement:

Expenses reported in the income statement, but not deducted in the tax return:
Warranty expense 9,000

(b.) No temporary differences existed at the beginning of 2013.
(c.) Pretax accounting income was $67,000 and taxable income was $8,000 for 2013.
(d.) There were no permanent differences.
(e.) The tax rate is 30%.

Required:
Calculate the amount of Income Tax Payable for the 2013 tax year. Show all work.

Prepare the journal entry to record the tax provision for 2013. Provide supporting computations.

DEBIT

CREDIT

DEBIT

CREDIT

Explanation / Answer

Income Tax Payable is $ 2,100.

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