Question

Novak Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $54,000 in 2021, $58,900 in 2022, and $64,300 in 2023. Novak's pretax financial income for 2020 is $272,300, 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 $ e Textbook 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 0 for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

A.

Taxable Income and Income Tax Payable for2020

Taxable Income	$95,100
Income Tax Payable	$28,530

Explanation;

Pre Tax Financial Income for 2020		$272,300
Temporary difference resulting in future taxable Amount in
2021	$(54,000)
2022	$(58,900)
2023	$(64,300)	$(177,200)
Taxable Income 2020		$95,100
Enacted Tax Rate		30 %
Income Taxes Payable for 2020		$28,530

B.)

Future Years   

	2021	2022	2023	Total
Future Taxable (deductible)Amount	$54,000	$58,900	$64,300	$177,200
Tax Rate	30%	30%	30%
Deferred Tax Liability (Asset)	$16,200	$17,670	$19,290	$53,160

Deferred Tax Liability at the end of 2020	$53,160
Deferred Tax Liability at the beginning of the year	0
Deferred Tax Expense for 2020 (Increase in deferred tax liability )	$53,160
Current Tax Expenses for 2020	$28,530
Income Tax Expense for 2020	$81,690

So.No	Account Title and Explanation	Debit	Credit
1	Income Tax Expenses	$81,690
	Income Tax Payable		$28,530
	Deferred Tax Liability		$53,160

C. Novak Corporation Income Statement (Partial)   

Particulars	Amount	Amount
Income Before Income Tax		$272,300
Income Tax Expenses
Current	$28,530
Deferred	$53,160	$81,690
Net Income		$190,610