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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Future Taxable Amount Arrow Company began operations at the beginning of 2019, At the end of 2019, Arrow reported taxable income of $20,800 and pretax financial income of $22,200 because of a single temporary difference. The income tax rate for the current year is 30%, but Congress has enacted a 40% tax rate for 2020 and beyond.
Required:
Prepare Arrow’s income tax journal entry at the end of 2019.
Prepare journal to record the entry for income tax of Company A at the end of 2019.
Income Tax Expenses: The expenses which are related to the taxable income of the individuals and business entities for an accounting period, and are recognized by them for the purpose of federal government and state government tax are called as income tax expenses.
Prepare journal to record the entry for income tax of Company A at the end of 2019:
| Date | Account title and Explanation | Post ref. | Amount | |
| Debit | Credit | |||
| 2019 | Â | Â | Â | Â |
| December 31 | Â Income tax expense | Â | $6,800 | Â |
| Â | Â Â Â Â Income tax payable (1) | Â | Â | $6,240 |
| Â | Â Deferred tax liability (2) | Â | Â | $560 |
| Â | (To record the income tax payable ) | Â | Â | Â |
Table (2)
- Income tax expense is an expense that decreases the stockholder’s equity and it is increased. Thus, it is debited.
- Accounts Payable is a liability and it is increased...
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