Question Completion Status: QUESTION 32 The following facts relate to Krung Thep
ID: 2599612 • Letter: Q
Question
Question Completion Status: QUESTION 32 The following facts relate to Krung Thep Corporation: 25 points Save A 1. Deferred tax liability, January 1, 2015, $40,000 2. Deferred tax asset, January 1, 2015, s0 3. Taxable income for 2015, $115,000 4. Pretax financial income for 2015, $200,000 5. Cumulative t 6. Cumulative 7. Tax rate for all years, 40% 8. The amounts, $220,000 difference at December 31, 2015, giving rise to future taxable difference at December 31, 2015,giving rise to future r deductible amounts, $35,000 company is expected to operate profitably in the future. a Compute income taxes payable for 2015. b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015 Prepare the income tax expense section of the income statement for 2015, beginning with the line "income before income taxes Attach File . @CA2 IN ? X :Explanation / Answer
Solution-
Description
Amount
Taxable Income
$115,000
Enacted tax rate
40%
Income tax payable for 2015
$46,000 ($115,000*40%)
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015.
Solution-
S.No.
Account Titles
Debit
Credit
1.
Income tax expense
80,000
Deferred Tax Asset
14,000
Income tax payable
46,000
Deferred Tax Liability
48,000
Working Note:
Temporary Difference
Future Taxable (Deductible) Amounts
Tax Rate
Deferred Tax (Asset)
Deferred Tax Liability
First one
$220,000
40%
$88,000
Second one
(35,000)
40%
$(14,000)
Totals
$185,000
$(14,000)
$88,000
*Because of a flat tax rate, these totals can be reconciled:
$185,000 X 40% = $(14,000) + $88,000.
Description
Amount
Deferred tax liability at the end of 2015
$88,000
Deferred tax liability at the beginning of 2015
40,000
Deferred tax expense for 2014 (increase required in deferred tax liability)
48,000
Deferred tax asset at the end of 2015
$(14,000
Deferred tax asset at the beginning of 2015
Description
Amount
Taxable Income
$115,000
Enacted tax rate
40%
Income tax payable for 2015
$46,000 ($115,000*40%)
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