Question

Exercise 19-3 Bonita Corporation began 2017 with a $94,800 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $324,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $516,800, the tax rate for all years is 40%, and taxable income for 2017 is $429,800. Compute income taxes payable for 2017. Income taxes payable

Answer 1

Solution 1:

Income tax payable for 2017 = $429,800 * 40% = $171,920

Solution 2:

Bonita Corporation
Journal Entries
Date	Particulars	Debit	Credit
31-Dec-17	Income tax expense Dr	$206,720.00
	To Income Tax Payable		$171,920.00
	To Deferred tax liability ($324,000*40% - $94,800)		$34,800.00
	(Being current income tax and deferred taxes)

Solution 3:

Bonita Corpoartion
Income statement (Partial) For the year ended Dec 31, 2017
Particulars		Amount
Income before Tax		$516,800.00
Income Tax Expense:
Current	$171,920.00
Deferred tax	$34,800.00	$206,720.00
Net Income		$310,080.00