Randolph Company reported pre-tax net income from continuing operations of $800,000 and taxable income of $500,000. The book-tax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and $180,000 favorable permanent difference from the receipt of life insurance proceeds. Randolph Company's applicable tax rate is 21%. a. Compute Randolph Company's current income tax expense. b. Compute Randolph Company's deferred income tax expense or benefit. Also prepare the journal entries for a. and b. above.

Randolph Company reported pre-tax net income from continuing operations of $800,000 and taxable income of $500,000. The book-tax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and $180,000 favorable permanent difference from the receipt of life insurance proceeds. Randolph Company's applicable tax rate is 21%. a. Compute Randolph Company's current income tax expense. b. Compute Randolph Company's deferred income tax expense or benefit. Also prepare the journal entries for a. and b. above.

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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