Question

The information that follows pertains to Julia Company:

1. Temporary differences for the year 2018 are summarized below.

Expenses deducted in the tax return, but not included in the income statement:

Depreciation	$	51,000
Prepaid expense	$	7,100

Expenses reported in the income statement, but not deducted in the tax return:

Warranty expense	$	8,100

1. (b.) No temporary differences existed at the beginning of 2018.

2. (c.) Pretax accounting income was $57,100 and taxable income was $7,100 for 2018.

3. (d.) There were no permanent differences.

4. (e.) The tax rate is 35%.

Required:
Prepare the journal entry to record the tax provision for 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer is given below

Credit Date 2018 Debit $19,985 $2,835 Journal Income Tax Expense Deferred Tax Asset To Deferred Tax Liability To Income Tax payable (Being Income tax and Deferred tax entries) $20,335 $2,485 Notes: Expenses considered in tax return will create Deferred Tax Liability Expenses not considered in tax return will create Deferred Tax Asset Income tax at 35% is created on Taxable income Income tax expense is balancing figure