Zekany Corporation would have had identical income before taxes on both its inco

Question

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2016 through 2019 except for differences in depreciation on an operational asset The asset cost $160,000 and is depreciated for income tax purposes in the following amounts: 2016 $52,800 2017 70,400 2018 24,000 2019 12,800 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows. 2016 2017 2018 $90,000 $110,000 $100,000 $100.000 2019 Accounting income before taxes and depreciation Assume the average and marginal income tax rate for 2016 and 2017 was 30%; however, during 2017 tax legislation was passed to raise the tax rate to 40% beginning in 2018. The 40% rate remained in effect through the years 2018 and 2019. Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2016 through 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet

Explanation / Answer

Journal Entries :-

Calculation of Tax Payable :-

Calculation of Temporary Difference :-

Calculate Deferred Tax Liability :-

Date Particulars Debit($) Credit($) Dec 31, 2016 Income tax Expense A/c Dr. 15000 To Deferred Tax Liability 3840 To Income Tax Payable 11160 Dec 31, 2017 Income Tax Expense A/c Dr. 22620 To Deferred Tax Liability 13440 To Income Tax Payable 9180 Dec. 31, 2018 Income Tax Expense A/c Dr. 24000 Deferred Tax Liability A/c Dr. 6400 To Income Tax Payable 30400 Dec 31, 2019 Income Tax Expense A/c Dr. 24000 Deferred Tax Liability A/c Dr. 10880 To Income Tax Payable 34880

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