(L.OBJ. 8) Accounting for corporate income tax [10—15 min]
The income statement of Tern’s Cards, Inc., reported income before income tax of $450 million (rounded) during a recent year. Assume Tern’s taxable income for the year was $343 million. The company’s income tax rate was close to 37.0%.
Requirements
1. Journalize Tern’s entry to record income tax for the year.
2. Show how Tern’s would report income tax expense on its income statement and income tax liabilities on its balance sheet. Complete the income statement, starting with income before tax. For the balance sheet, assume all beginning balances were zero.
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