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."

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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