Question

Font Voice Grammarly The following information is for Hulk Gyms' first year of operations. Amounts are in millions of dollars. The enacted tax rate is 30%. Year 018 $ 60.2 Future Taxable Amounts 2019 2020 2021 2022 Future Amounts Total Accounting in Accounting income Temporary differenc Prepaid insurance Taxable income 4) $ 3.1 $ 3.1 $ 3.1 $ 3.1 $ 12.4 Required: Prepare a compound journal entry to record the income tax expense for the year 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) 1. Record the income taxes. I

Answer 1

There is difference between the taxable income and accounting income due to different laws and because of which there is deferred tax asset or liability.

The calculations are below:

Income tax payable is due to taxable income and it is =47.8*10^6*30%=14340000

Income tax expense is due to accounting income it I s=60.2*10^6*30%=18060000

The difference between two is the deferred tax liability and it is =18060000-14340000=3720000

Journal entry below:

Credit Date 2018 end Account Debit Income tax expense 18,060,000 Deferred tax liability Income tax payable record income tax for 2018 3,720,000 14.340.000