Keira's Kites Inc. reported a deferred tax liability of $40,000 at the beginning of 2020. At the end of 2020, the related cumulative temporary difference amounts to $300,000, and it will reverse evenly over the next 4 years. Pretax accounting income for 2020 is $380,000, the tax rate for all years is 20%, and taxable income for 2020 is $280,000. Instructions: (a) Compute income taxes payable for 2020. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (c) Prepare the income tax expense section of the income statement for 2020 beginning with the line "Income before income taxes."
Keira's Kites Inc. reported a deferred tax liability of $40,000 at the beginning of 2020. At the end of 2020, the related cumulative temporary difference amounts to $300,000, and it will reverse evenly over the next 4 years. Pretax accounting income for 2020 is $380,000, the tax rate for all years is 20%, and taxable income for 2020 is $280,000. Instructions: (a) Compute income taxes payable for 2020. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (c) Prepare the income tax expense section of the income statement for 2020 beginning with the line "Income before income taxes."
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 8E: Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a...
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![Keira's Kites Inc. reported a deferred tax
liability of $40,000 at the beginning of 2020.
At the end of 2020, the related cumulative
temporary difference amounts to $300,000,
and it will reverse evenly over the next 4
years.
Pretax accounting income for 2020 is
$380,000, the tax rate for all years is
20%, and taxable income for 2020 is
$280,000.
Instructions:
(a) Compute income taxes payable for
2020.
(b) Prepare the journal entry to record
income tax expense, deferred income
taxes, and income taxes payable for
2020.
(c) Prepare the income tax expense
section of the income statement for
2020 beginning with the line "Income
before income taxes."](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F12972494-ae2c-4fb6-89c5-18c7eab64205%2Fa5b77bd4-b445-47ea-a80f-6ed96c633c32%2F2f35wc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Keira's Kites Inc. reported a deferred tax
liability of $40,000 at the beginning of 2020.
At the end of 2020, the related cumulative
temporary difference amounts to $300,000,
and it will reverse evenly over the next 4
years.
Pretax accounting income for 2020 is
$380,000, the tax rate for all years is
20%, and taxable income for 2020 is
$280,000.
Instructions:
(a) Compute income taxes payable for
2020.
(b) Prepare the journal entry to record
income tax expense, deferred income
taxes, and income taxes payable for
2020.
(c) Prepare the income tax expense
section of the income statement for
2020 beginning with the line "Income
before income taxes."
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