BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
3 views

Single Temporary Difference: Multiple Rates At the end of 2019, Fulhage Company reported taxable income of $9,000 and pretax financial income of $10,600. The difference is due to depreciation for tax purposes in excess of depreciation for financial reporting purposes. The income tax rate for the current year is 40%, but Congress has enacted tax rates of 35% for 2020 and 30% for 2021 and beyond.

Fulhage has calculated the excess of its financial depreciation over its tax depreciation for future years as follows: 2020, $600; 2021, $700; and 2022, $300. Prior to 2019, the company had no deferred tax liability or asset.

Required:

Prepare Fulhage’s income tax journal entry at the end of 2019.

To determine

Record the income tax journal entry of Company F at the end of 2019.

Explanation

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.

Record the income tax journal entry of Company F at the end of 2019:

DateAccount title and ExplanationPost ref.Amount
DebitCredit
2019    
December 31Income tax expense $4,110 
     Income tax payable (1)  $3,600
     Deferred tax liability (2)  $510
 (To record the income tax at the year-end )   

Table (1)

  • Income tax expense is an expense that decreases the stockholder’s equity and it is increased. Thus, it is debited.
  • Income tax payable is a liability and it is increased. Thus, it is credited.
  • Deferred tax liability is a liability and it is increased. Thus, it is credited...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is inflation and what causes it?

Essentials of Economics (MindTap Course List)

Should an economic model describe reality exactly?

Principles of Microeconomics (MindTap Course List)

What is cultural diversity in an organization?

Foundations of Business (MindTap Course List)

Why is the accounting for a manufacturing business more complicated than that for a merchandising business?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

If a companys board of directors wants management to maximize shareholder wealth, should the CEOs compensation ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)