Question :
Question
E19-1 (One Temporary Difference, Future Taxable Amounts, One Rate, No : 1161713
Question
E19-1 (One Temporary Difference, Future Taxable Amounts, One Rate, No Beginning Deferred Taxes) South Carolina Corporation has one temporary difference at the end of 2014 that will reverse and cause taxable amounts of $55,000 in 2015, $60,000 in 2016, and $75,000 in 2017. South Carolina’s pretax financial income for 2014 is $400,000 and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2014.
(a) Compute taxable income and income taxes payable for 2014.
Pretax financial income for 2014
Amount
Temporary difference resulting in future
taxable amounts in year:
2014
Amount
2015
Amount
2016
Amount
Formula
Taxable income for 2014
Formula
Enacted tax rate
Percentage
Income tax payable for 2014
Formula
(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income
taxes payable for 2014.
Future Years
2014
2015
2016
Total
Future taxable (deductible) amounts
Amount
Amount
Amount
Formula
Tax rate
Percentage
Percentage
Percentage
Deferred tax liability (asset)
Formula
Formula
Formula
Formula
Deferred tax liability at the end of 2014
Formula
Deferred tax liability at the beginning of 2014
Amount
Deferred tax expense for 2014(increase in deferred tax liability)
Formula
Current tax expense for 2014 (Income tax payable)
Amount
Income tax expense for 2014
Formula
Account Title
Formula
Account Title
Amount
Account Title
Amount
(c) Prepare the income tax expense section of the income statement for 2014, beginning with the
line “Income before income taxes.”
Income before income taxes
$400,000
Income tax expense
Current
Amount
Deferred
Amount
Formula
Net income after income taxes
Formula