Question

Exercise 19-8 (Part Level Submission) Sweet Company has the following two temporary differences between its income tax expense and income taxes payable. 2018 2017 2019 Pretax financial income $849,000 $883,000 $961,000 Excess depreciation expense on tax return (30,800) (38,900) (10,300) 21,000 9,600 8,000 Excess warranty expense in financial income $839,200 $853,700 $958,700 Taxable income The income tax rate for all years is 40%. (a) Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit 2017

Answer 1

Solution:

Sweet company
Journal Entries
Date	Particulars	Debit	Credit
31-Dec-17	Income tax expense Dr	$339,600.00
	Deferred Tax Assets Dr ($21,000*40%)	$8,400.00
	To Income Tax Payable		$335,680.00
	To Deferred tax liability ($30,800*40%)		$12,320.00
	(Being current income tax and deferred taxes)
31-Dec-18	Income tax expense Dr	$353,200.00
	Deferred Tax Assets Dr ($9,600*40%)	$3,840.00
	To Income Tax Payable		$341,480.00
	To Deferred tax liability ($38,900*40%)		$15,560.00
	(Being current income tax and deferred taxes)
31-Dec-19	Income tax expense Dr	$384,400.00
	Deferred Tax Liability Dr ($8,000*40%)	$3,200.00
	To Income Tax Payable		$383,480.00
	To Deferred tax Assets ($10,300*40%)		$4,120.00
	(Being current income tax and deferred taxes)