Mathus, Inc. reported income before tax of $ 180,000 and tax-able income was $ 200,000. And tax able income was $200,000. This $ 20,000 difference was due to unearned revenues that the firm recorded as revenue for tax purposes, but as a liability for book purposes. Mathus is subject to a 35% tax rate.
a. What is the book basis of the unearned revenue?
b. What is the tax basis of the unearned revenue?
c. What are Mathus’s deferred tax asset, income tax payable, and income tax expense for the current year?
d. Prepare the journal entry to record the tax provision for the current year.