Wildhorse Corporation began operations in 2017 and reported pretax financial inc

Question

Wildhorse Corporation began operations in 2017 and reported pretax financial income of $205,000 for the year. Wildhorse’s tax depreciation exceeded its book depreciation by $42,000. Wildhorse’s tax rate for 2017 and years thereafter is 40%. Assume this is the only difference between Wildhorse’s pretax financial income and taxable income.

Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Show how the deferred tax liability will be classified on the December 31, 2017, balance sheet.

Account Titles and Explanation

Debit

Credit

Explanation / Answer

1)

2) Deferred tax liability should be classified as a non-current liability on the December 31, 2017, balance sheet.

Account titles and explanation Debit Credit Income Tax Expense($205,000 * 40%) $82,000 Income Tax Payable $65,200 Deferred Tax Liability($42,000 * 40%) $16,800

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.