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E19-8B (Two Temporary Differences, One Rate, 3 Years)Tipper Company has two temporary differences between its income tax expense and income taxes payable. The following information is available. 2014 2015 2016 Pretax financial income $225,000 $268,000 $

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E19-8B (Two Temporary Differences, One Rate, 3 Years)Tipper Company has two temporary differences between its income tax expense and income taxes payable. The following information is available.;2014 2015 2016;Pretax financial income $225,000 $268,000 $365,000;Excess of depreciation expense on tax return (20,000) (15,000) (20,000);Excess of warranty expense on financial income 10,000 15,000 16,000;Taxable income $215,000 $268,000 $361,000;The income tax rate for all years is 30%.;Instructions;(a) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2014, 2015, and 2016.;(b) Assuming there were no temporary differences prior to 2014, indicate how deferred taxes will be reported on the 2015 balance sheet. Tipper?s product warranty is for 12 months.;(c) Prepare the income tax expense section of the income statement for 2015, beginning with the line;?Pretax financial income.?

 

Paper#75327 | Written in 18-Jul-2015

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