Question

Carla Corporation began 2017 with a $96,900 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $381,400, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $493,500, the tax rate for all years is 40%, and taxable income for 2017 is $354,350. Compute income taxes payable for 2017. Income taxes payable g SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (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 O for the amounts.) Account Titles and Explanation Debit Credit Prepare the income tax expense section of the income statement for 2017 beginning with the line Income before income taxes.". (Enter loss using either a negative sign preceding the numbèr e.g. -45 or parentheses e.g. (45).) Carla Corporation Income Statement (Partial)

Answer 1

SOLUTION

(A)

Taxable income for 2017	$354,350
Enacted tax rate	40%
Income tax payable for 2017	$141,740

(B)

Income Tax Expense ($493,500 * 40%)	$197,400
Income Tax Payable		$141,740
Deferred Tax Liability		$55,660

(C)

Particulars	Amount ($)	Amount ($)
Income before income taxes		493,500
Income tax expense:
Current	141,740
Deferred	55,660	197,400
Net Income		296,100