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he following information is for James Industries' first year of operations. Amounts are in millions of dollars.

Year Future Taxable Amounts Future Amounts Total
2020 2021 2022 2023 2024
Accounting income $90
Temporary difference:
Advance rent payment (24 ) $6.00 $6.00 $6.00 $6.00 $24.00
Taxable income $66

In 2021 the company's pretax accounting income was $76.0. The enacted tax rate for 2020 and 2021 is 25%, and it is 30% for years after 2021.

Required:
Prepare a journal entry to record the income tax expense for the year 2021.

Respuesta :

Parrain

Answer:

Date                           Account Title                                Debit              Credit

December 2021        Income tax expense             $19,000,000

                                   Deferred tax liability              $1,500,000

                                   Income tax payable                                      $20,500,000

Explanation:

Amounts are in millions of dollars so convert them.

Income tax expense for 2021 is:

= Accounting income * tax rate

= 76,000,000 * 25%

= $19,000,000

Deferred tax liability for 2021 is:

= Advance rent payment for 2021 * 25%

= 6,000,000 * 25%

= $1,500,000

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