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Prepare a journal entry to record the income tax expense for the year 2021. Show well-labeled computations for income tax payable and the change in the deferred tax account.

Prepare a journal entry to record the income tax expense for the year 2021. Show well-labeled computations for income tax payable and the change in the deferred tax account.

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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The following information is for James Industries' first year of operations. Amounts are in millions of dollars. Accounting income Temporary difference: Advance rent payment Taxable income Year 2020 $60 (12) $48 Future Amounts Future Taxable Amounts 2021 2022 2023 2024 Total $3 $3 $3 $3 $ 12 As of 2020, the enacted tax rate was 25% for that year and all future years. In 2021, the company's pretax accounting income was $67. The enacted tax rate for 2020 and 2021 is 25%, and it is now 30% for years after 2022 and beyond. Assume no new temporary items in 2021. Prepare a journal entry to record the income tax expense for the year 2021. Show well-labeled computations for income tax payable and the change in the deferred tax account.
Transcribed Image Text:The following information is for James Industries' first year of operations. Amounts are in millions of dollars. Accounting income Temporary difference: Advance rent payment Taxable income Year 2020 $60 (12) $48 Future Amounts Future Taxable Amounts 2021 2022 2023 2024 Total $3 $3 $3 $3 $ 12 As of 2020, the enacted tax rate was 25% for that year and all future years. In 2021, the company's pretax accounting income was $67. The enacted tax rate for 2020 and 2021 is 25%, and it is now 30% for years after 2022 and beyond. Assume no new temporary items in 2021. Prepare a journal entry to record the income tax expense for the year 2021. Show well-labeled computations for income tax payable and the change in the deferred tax account.
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