Question

Problem 19-1 (Part Level Submission) The following information is available for Skysong Corporation for 2017. 1. Depreciation reported on the tax return exceeded depreclation reported on the income statement by $122,000. This difference will reverse in equal amounts of $30,500 over the years 2018- 2021 2. Interest received on municipal bonds was $10,000. December 31, 2017, for book purposes. 3. Rent collected in advance on January 1, 2017, totaled $63,900 for a 3-year period. Of this amount, $42,600 was reported as unearned 4. The tax rates are 40% for 2017 and 35% for 2018 and subsequent years. 5. Income taxes of $296,000 are due per the tax return for 2017 6. No deferred taxes existed at the beginning of 2017 (a) Your answer correct Compute taxable income for 2017 740000 Taxable income for 2017 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT LINK TO TEXT AHamnte 1 af 2 ued

Answer 1

Working Note
Particulars	Amount
Income Tax Payable for 2017	$296,000.00
Tax rate for 2017	40%
Taxable Income (296000/40%)	$740,000.00
Add: Difference due to Depreciation	$122,000.00
Add: Interest on Muincipal bonds	$10,000.00
Less: Unearned rent	($42,600.00)
Pre tax financial income	$829,400.00

Journal Entries - Skysong Corporation
Date	Particulars	Debit	Credit
31-Dec-17	Income tax expense (BF)	$323,790.00
	Deferred tax assets(42600*35%)	$14,910.00
	Income tax Payable		$296,000.00
	Deferred tax liability ($122,000*35%)		$42,700.00
	To Record Income tax expense for 2017
31-Dec-18	Income tax expense	$368,480.00
	Deferred tax liability ($30500*35%)	$10,675.00
	Income tax Payable(1062000*35%)		$371,700.00
	Deferred tax Assets($21300*35%)		$7,455.00
	To Record Income tax expense for 2018