Christopher Corporation is subject to a 40% income tax rate. The following amounts were taken from the records: income before income taxes $100,000 and taxable income $120,000. Instructions: record the adjusting entry.

Christopher Corporation is subject to a 40% income tax rate. The following amounts were taken from the records: income before income taxes $100,000 and taxable income $120,000. Instructions: record the adjusting entry.

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

Christopher Corporation is subject to a 40% income tax rate.

The following amounts were taken from the records:

income before income taxes $100,000 and

taxable income $120,000.

Instructions: record the adjusting entry.

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

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