Wileyplus - Chp 19

Chapter 19 Part 1 AE19-2 Two Differences, No Beginning Deferred Taxes, Tracked through 2 Years) The following information is available for Wenger Corporation for 2006. Excess of tax depreciation over book depreciation, $48,000. This $48,000 difference will reverse equally over the years 2007-2010. Deferral, for book purposes, of $20,000 of rent received in advance. The rent will be earned in 2007. Pretax financial income, $300,000. Tax rate for all years, 40%. Instructions (a) Compute taxable income for 2006. $ 272,000 (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2006. (List multiple debit/credit entries in order of magnitude.) (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007, assuming taxable income of $325,000. AE19-3 Bandung Corporation began 2007 with a $92,000 balance in the Deferred Tax Liability account. At the end of 2007, the related cumulative temporary difference amounts to $410,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2007 is $535,000, the tax rate for all years is 40%, and taxable income for 2007 is $355,000. Instructions (a) Compute income taxes payable for 2007. $ 142,000 (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007. (List multiple debit/credit entries in order of magnitude.) (c) Prepare the income tax expense section of the income statement for 2007 beginning with the line "Income before income taxes." AE19-5 The following facts relate to Krung Thep Corporation. Deferred tax liability, January 1, 2007, $40,000. Deferred tax asset, January 1, 2007, $0. Taxable income for 2007, $85,000. Pretax financial income for 2007, $190,000. Cumulative temporary difference at December 31, 2007, giving rise to future taxable amounts, $240,000. Cumulative temporary difference at December 31, 2007, giving rise to future deductible amounts, $35,000. Tax rate for all years, 40%. The company is expected to operate profitably in the future. Instructions (a) Compute income taxes payable for 2007. $ 34,000 (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007. (List multiple debit/credit entries in order of magnitude.) (c) Prepare the income tax expense section of the income statement for 2007, beginning with the line "Income before income taxes." P19-1 Description Debit Credit Income Tax Expense 120,000   Deferred Tax Asset 8,000          Income Tax Payable   108,800        Deferred Tax Liability   19,200 Description Debit Credit Income Tax Expense 133,200   Deferred Tax Liability 4,800          Income Tax Payable   130,000        Deferred Tax Asset   8,000 Description Debit Credit Income Tax Expense 214,000          Income Tax Payable   142,000        Deferred Tax Liability   72,000 Income before income taxes   $ 535,000 Income tax expense           Current $ 142,000         Deferred 72,000 214,000 Net Income   $ 321,000 Description Debit Credit Income Tax Expense 76,000   Deferred Tax Asset 14,000          Deferred Tax Liability   56,000        Income Tax Payable   34,000 Income before income taxes   $ 190,000 Income tax expense           Current $ 34,000         Deferred 42,000 76,000 Net Income   $ 114,000