(Two Differences, No Beginning Deferred Taxes, Tracked through 2 Years) The following information is available for Wenger Corporation for 2016 (its first year of operations).1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2017–2020.2. Deferral, for book purposes, of $20,000 of rent received in advance. The rent will be recognized in 2017.3. Pretax financial income, $300,000.4. Tax rate for all years, 40%.Instructions(a) Compute taxable income for 2016.(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016.(c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming taxable income of $325,000.
(Two Differences, No Beginning
1. Excess of tax
2. Deferral, for book purposes, of $20,000 of rent received in advance. The rent will be recognized in 2017.
3. Pretax financial income, $300,000.
4. Tax rate for all years, 40%.
Instructions
(a) Compute taxable income for 2016.
(b) Prepare the
(c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming taxable income of $325,000.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
