Question

Exercise 19-3 Martinez Corporation began 2017 with a $97,700 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $324,800, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $563,900, the tax rate for all years is 40%, and taxable income for 2017 is $483,350. 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 0 for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

1.Computation of Taxable Income

Taxable income = $483,350

Tax rate = 40%

Income tax payable = Taxable income * Tax rate = $483,350 * 40% = $193,340

2. Journal Entry
Date	Account name	Debit	Credit
2017	Income tax expense	$2,25,560
	Income tax payable		$1,93,340
	Deferred tax liabilty (324800*40%-97700)		$32,220

3. Income statement for the year 2017:
Pretax operating Income		$5,63,900
Income tax expense
Current tax	$1,93,340
Deferred tax	$32,220	$2,25,560
Net Operting income after taxes		$3,38,340