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Bonita Corp. has a deferred tax asset account with a balance of $67,500 at the end of 2019 due to a single cumulative temporary difference of $337,500. At the end of 2020, this same temporary difference has increased to a cumulative amount of $448,200. Taxable income for 2020 is $864,500. The tax rate is 20% for all years. At the end of 2019, Bonita Corp. had a valuation account related to its deferred tax asset of $48,900.

Bonita Corp. has a deferred tax asset account with a balance of $67,500 at the end of 2019 due to a single cumulative temporary difference of $337,500. At the end of 2020, this same temporary difference has increased to a cumulative amount of $448,200. Taxable income for 2020 is $864,500. The tax rate is 20% for all years. At the end of 2019, Bonita Corp. had a valuation account related to its deferred tax asset of $48,900.

FINANCIAL ACCOUNTING
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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Rahul bhaliya

Bonita Corp. has a deferred tax asset account with a balance of $67,500 at the end of 2019 due to a single cumulative temporary difference of $337,500. At the end of 2020, this same temporary difference has increased to a cumulative amount of $448,200. Taxable income for 2020 is $864,500. The tax rate is 20% for all years. At the end of 2019, Bonita Corp. had a valuation account related to its deferred tax asset of $48,900. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that the deferred tax asset will be realized in full. (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.) Account Titles and Explanation (To record income tax expense) (To adjust allowance account) Debit Credit |||| (b) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that none of the deferred tax asset will 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 O for the amounts.)
Transcribed Image Text:Bonita Corp. has a deferred tax asset account with a balance of $67,500 at the end of 2019 due to a single cumulative temporary difference of $337,500. At the end of 2020, this same temporary difference has increased to a cumulative amount of $448,200. Taxable income for 2020 is $864,500. The tax rate is 20% for all years. At the end of 2019, Bonita Corp. had a valuation account related to its deferred tax asset of $48,900. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that the deferred tax asset will be realized in full. (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.) Account Titles and Explanation (To record income tax expense) (To adjust allowance account) Debit Credit |||| (b) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that none of the deferred tax asset will 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 O for the amounts.)
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