The following information is available for Oriole Corporation for 2025. 1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $118,000. This difference will reverse in equal amounts of $29,500 over the years 2026-2029. 2. Interest received on municipal bonds was $10,000. 3. Rent collected in advance on January 1, 2025, totaled $58,800 for a 3-year period. Of this amount, $39,200 was reported as unearned at December 31, 2025, for book purposes. 4. The tax rates are 20% for 2025 and 17% for 2026 and subsequent years. 5. Income taxes of $173,000 are due per the tax return for 2025. 6. No deferred taxes existed at the beginning of 2025. Compute taxable income for 2025. Taxable income for 2025 $ Compute pretax financial income for 2025. Pretax financial income for 2025 $ 865000 953800 Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2025 and 2026. Assume taxable income was $365,000 in 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 2025 Income Tax Expense Deferred Tax Asset Income Tax Payable Deferred Tax Liability 2026 Income Tax Expense Deferred Tax Liability Income Tax Payable Deferred Tax Asset Debit Credit 186396 6664 78557 5015 173000 20060 80240 3332

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 available for Oriole Corporation for 2025.

Depreciation reported on the tax return exceeded depreciation reported on the income statement by $118,000. This difference will reverse in equal amounts of $29,500 over the years 2026-2029.
Interest received on municipal bonds was $10,000.
Rent collected in advance on January 1, 2025, totaled $58,800 for a a-year period. Of this amount, $39,200 was reported as unearned at December 31, 2025, for book purposes.
The tax rates are 20% for 2025 and 17% for 2026 and subsequent years.
Income taxes of $173,000 are due per the tax return for 2025.
No deferred taxes existed at the beginning of 2025.

Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2025 and 2026. Assume taxable income was $365,000 in 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)