Question

The following information is available for Metlock Corporation for 2019 (its first year of operations).

1.		Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2020–2023.
2.		Deferral, for book purposes, of $19,800 of rent received in advance. The rent will be recognized in 2020.
3.		Pretax financial income, $303,400.
4.		Tax rate for all years, 20%.

Part 1

Compute taxable income for 2019.

Taxable income

$enter Taxable income in dollars

eTextbook and Media

List of Accounts

Part 2

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. (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 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Part 3

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming taxable income of $297,100. (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 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Answer 1

1
Pretax financial income	303400
Less: Excess of tax depreciation	-40000
Add: Rent Received in advance	19800
Taxable income	283200
2
Account Titles and Explanation	Debit	Credit
Income tax expense	60680
Deferred tax asset	3960		=19800*20%
Deferred tax liability		8000	=40000*20%
Income taxes payable		56640	=283200*20%
3
Account Titles and Explanation	Debit	Credit
Income tax expense	61380
Deferred tax liability	2000		=8000/4
Deferred tax asset		3960
Income taxes payable		59420	=297100*20%