Question

Exercise 19-18 Blossom Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2016. Equipment (net) Estimated warranty liability Book Basis $436,000 $208,000 Tax Basis $379,400 so It is estimated that the warranty liability will be settled in 2017. The difference in equipment (net) will result in taxable amounts of $18,600 in 2017. $27,100 in 2018, and $10,900 in 2019. The company has taxable income of $557,000 in 2016. As of the beginning of 2016, the enacted tax rate is 34% for 2016-2018, and 30% for 2019. Blossom expects to report taxable income through 2019. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Income Tax Expense Deferred Tax Asset Income Tax Payable Deferred Tax Liability SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Answer 1

Answer DATE Date credit Account Tiles Explanation Income Tax expense (81) Deferred tax Assets Inkome tax payable Deferred tax Liability Debit $137468 $90720 $189 380 $ 18808 working- Deferred tex Assets = $ 208000 x 344. = $ 70720 Income tax payable = $557,000 X 34% = $189.380 Deferred.tax Liability -($ 18,600+27,100)x349. +$10.900 X30%. = $ 15538 +$ 3270 = $ 18808 Blossom Ing Balance sheet C Partial AS OD . December 31 2016 Long term Liability Defferred tax liability $18808 Current Assets Deferred tax assets. $70720