Exercise 18-4 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT SHOW
ID: 2538688 • Letter: E
Question
Exercise 18-4
SHOW LIST OF ACCOUNTS
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SHOW LIST OF ACCOUNTS
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Date
Account Titles and Explanation
Debit
Credit
2017
(To record current tax expense.)
(To record deferred tax expense.)
2018
(To record current tax expense.)
(To record deferred tax expense.)
2019
(To record current tax expense.)
(To record deferred tax expense.)
SHOW LIST OF ACCOUNTS
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Exercise 18-4
Culver Corporation reports the following amounts in its first three years of operations.2017 2018 2019 Taxable income $245,200 $120,400 $125,300 Accounting income 155,400 137,000 133,200
The difference between taxable income and accounting income is due to one reversing difference. The tax rate is 30% for all years and the company expects to continue with profitable operations in the future.
Explanation / Answer
Year 2017 2018 2019 Taxable Income 2,45,200 1,20,400 1,25,300 Accounting Income 1,55,400 1,37,000 1,33,200 Reversing Difference 89,800 -16,600 -7,900 DTA Tax Rate 30% 30% 30% Current Tax 73560 36120 37590 (Taxable Income *30%) Year During the Year At Year End 2017 89,800 Orginating 89,800 2018 16,600 Reversing 73,200 2019 7,900 Reversing 65,300 Year 2017 2018 2019 Deferred Tax Liability Deferred Tax Liability Deferred Tax Liability Opening Balance of Timing Diffrence 0.00 89,800 73,200 Add: Additions 89,800 0.00 0.00 Less: Reversals 0.00 16,600 7,900 Closing Balance of Timing Difference 89,800 73,200 65,300 Closing Balance of DTL 26940 21960 19590 Less: Opening Balance of DTL 0 26940 21960 Transfer to PL 26940 -4980 -2370 Debited Credited Credited Journal Entry: 2017 Income Tax Expense Account Dr. 73,560 To Income Tax Payable 73560 (Being Income Tax Recorded) 2017 Profit & Loss Account Dr. 26940 To Deferred Tax Liability 26940 (Being Deferred Tax Recorded) 2018 Income Tax Expense Account Dr. 36,120 To Income Tax Payable 36120 (Being Income Tax Recorded) 2018 Deferred Tax Liability Dr. 4,980 To Profit & Loss Account 4,980 (Being Deferred Tax Recorded) 2018 Income Tax Expense Account Dr. 37,590 To Income Tax Payable 37,590 (Being Income Tax Recorded) 2018 Deferred Tax Liability Dr. 2,370 To Profit & Loss Account 2,370 (Being Deferred Tax Recorded)
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