Answered: 2018 Tincome Tax Expense 24,000 Income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 19-24

Beilman Inc. reports the following pretax income (loss) for both book and tax purposes.

Year	Pretax Income (Loss)	Tax Rate
2018	$120,000		20	%
2019	90,000		20	%
2020	(280,000)		25	%
2021	120,000		25	%

The tax rates listed were all enacted by the beginning of 2018.

Prepare the journal entries for years 2018–2021 to record income tax expense (benefit) and income taxes payable (refundable), and the tax effects of the loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-half of the benefits of the loss carryforward will not be realized. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

2018 Tincome Tax Expense
24,000
Income Tax Payable
24,000
2019
Income Tax Expense
18,000
Income Tax Payable
18,000
2020
Income Tax Expense
70,000
Deferred Tax Asset
70,000
(To record income taxes.)
Income Tax Expense
112,000
[Allowance to Reduce Defer
30,000
(To record allowance.)
2021 Tincome Tax Expense
Deferred Tax Asset
(To record income taxes.)
Allowance to Reduce Defer
Income Tax Expense

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