Question
Consider these four situations. Answer questions a-g. Then write out the journal entry for each. Facts: SITUATIONS 1 2 4 4 Taxable income $125,000 $275,000
- Consider these four situations. Answer questions a-g. Then write out the journal entry for each.
Facts:
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| 1 | 2 | 4 | 4 |
Taxable income | $125,000 | $275,000 | $65,000 | $120,000 |
Total Future deductible amounts | 20,000 | 0 | 18,000 | 12,000 |
Total Future taxable amounts | 0 | 30,000 | 9,000 | 28,000 |
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Balance BEGINNING of year: |
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Deferred tax asset | 2,000 | 0 | 11,000 | 6,000 |
Deferred tax liability | 0 | 2,000 | 3,000 | 15,000 |
Assume the tax rate is and will be 40% in all situations.
Please complete the following table and prepare journal entries for the four situations.
Hint 1: Tax Expense = Taxes Payable - Deferred tax asset + Deferred tax liability
Hint 2: Income Taxes Payable = Current Tax Expense
Hint 3: Tax Expense = Current Tax Expense + Deferred Tax Expense
| Situation 1 | Situation 2 | Situation 3 | Situation 4 | |
a. DTA ending balance |
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b. DTL ending balance |
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c. Income taxes payable |
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d. DTA change |
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e. DTL change |
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f. Income tax expense |
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g. Deferred tax expense |
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