Accounts payable Bonds payable, due year 2 Deferred income tax liability Discount on bonds payable Dividends payable on 2/15/Y2 Income tax payable Notes payable, due 1/19/Y3 $19,000 34,000 4,000 2,000 5,000 9,000 6,000 The deferred income tax liability is based on temporary differences stemming from different depreciation methods for financial reporting and income taxes. In Gar's December 31, year 1 balance sheet, the current liabilities total was

Accounts payable Bonds payable, due year 2 Deferred income tax liability Discount on bonds payable Dividends payable on 2/15/Y2 Income tax payable Notes payable, due 1/19/Y3 $19,000 34,000 4,000 2,000 5,000 9,000 6,000 The deferred income tax liability is based on temporary differences stemming from different depreciation methods for financial reporting and income taxes. In Gar's December 31, year 1 balance sheet, the current liabilities total was

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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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Gar, Inc.'s trial balance reflected the following liability account balances at December 31, year 1:
Accounts payable
Bonds payable, due year 2
Deferred income tax liability
Discount on bonds payable
Dividends payable on 2/15/Y2
Income tax payable
Notes payable, due 1/19/Y3
$19,000
34,000
4,000
2,000
5,000
9,000
6,000
The deferred income tax liability is based on temporary differences stemming from different depreciation methods for financial
reporting and income taxes.
In Gar's December 31, year 1 balance sheet, the current liabilities total was

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