Question

Pharoah Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $58,600 in 2021, $64,100 in 2022, and $69,000 in 2023. Pharoah’s pretax financial income for 2020 is $289,500, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020.

Pharoah Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $58,600 in 2021. $64.100 in 2022. and $69.000 in 2023. Pharoah's pretax financial income for 2020 is $289.500, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020. Compute taxable income and income taxes payable for 2020. Taxable income $ Income taxes payable $ eTextbook and Media List of Accounts Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (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 for the amounts.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income taxes.". (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). Pharoah Corporation Income Statement (Partial)

Answer 1

Computation of Taxable Income & Income Tax Payable
Pretax Financial Income for year 2020		$289,500.00
Temporary Difference that will reverse in Future (58600+64100+69000)		$191,700.00
Taxable Income for year 2020		$97,800.00
Less: Income Tax @ 30%		$29,340.00
Income Tax Payable for 2020		$68,460.00
Journal General- Pharoah Corporation
Account Tittle	Debit	Credit
Income Tax Expense (BF)	$125,970
Income Tax Payable		$68,460
Deferred Tax Liability (191700*30%)		$57,510
Pharoah Corporation
Income Statement (Partial)
For the year ended 2020
Income before income taxes		$289,500
Income tax expense
Current	$68,460
Deferred	$57,510	$125,970
Net income after income taxes		$163,530