There was no homework solution for this answer either for me to check my answer. Willingham, Inc., an accrual basis C corporation, reports pretax book income of $1,600,000. At the beginning of the year, Willingham reported no deferred tax accounts on its balance sheet. At the end of the year, Willingham’s depreciable assets had a net book value of $15,000,000. It is subject to a 21% U.S. income tax rate in the current year and for the foreseeable future. Willingham’s book-tax differences include the following. Compute the entity’s current and deferred Federal income tax expense for the year. Below is what I have. Are you able to check my answer? Amount Tax rate Current tax Deferred tax Book income 1,600,000 add - provision for bad debt 4,000,000 21% -840000 less - tax depr excess of book -3,000,000 21% 630000 less - book installment gain -2,000,000 21% 420000 less - non-tax muni tax -200,000 0% 0 Taxable Income 400,000 21% 84000 210000 Current tax 400,000 21% 84,000 add - deferred tax expense 1,000,000 21% 210,000 Total tax 294,000 21% taxable income from bad debt -4,000,000 less - book installment gain 2,000,000 less - tax depr excess of book 3,000,000 Deferred tax expense 1,000,000 Journal entries are: Journal Entries Account titles Debit Credit Income tax expense 294,000 Income tax payable 84,000 Deferred tax liability
There was no homework solution for this answer either for me to check my answer.
Willingham, Inc., an accrual basis C corporation, reports pretax book income of $1,600,000. At the beginning of the year, Willingham reported no
Willingham’s book-tax differences include the following. Compute the entity’s current and deferred Federal income tax expense for the year.
Below is what I have. Are you able to check my answer?
|
Amount |
Tax rate |
Current tax |
Deferred tax |
|
|
Book income |
1,600,000 |
|||
|
add - provision for |
4,000,000 |
21% |
-840000 |
|
|
less - tax depr excess of book |
-3,000,000 |
21% |
630000 |
|
|
less - book installment gain |
-2,000,000 |
21% |
420000 |
|
|
less - non-tax muni tax |
-200,000 |
0% |
0 |
|
|
Taxable Income |
400,000 |
21% |
84000 |
210000 |
|
Current tax |
400,000 |
21% |
84,000 |
|
|
add - deferred tax expense |
1,000,000 |
21% |
210,000 |
|
|
Total tax |
294,000 |
21% |
||
|
taxable income from bad debt |
-4,000,000 |
|||
|
less - book installment gain |
2,000,000 |
|||
|
less - tax depr excess of book |
3,000,000 |
|||
|
Deferred tax expense |
1,000,000 |
|
Journal Entries |
||
|
Account titles |
Debit |
Credit |
|
Income tax expense |
294,000 |
|
|
Income tax payable |
84,000 |
|
|
|
210,000 |
Thanks, Liz
Yes, the Journal entry provided by you is correct and I am also providing you the solution for further understanding.
Tax is the liability which has to be paid by the individual or the corporation to the Federal Government of the country.
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