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E19.11 (LO 1, 2) (One Difference, Multiple Rates, Effect of Beginning Balance versus No Beginning Deferred Taxes) At the end of 2019, Lucretia McEvil Company

E19.11 (LO 1, 2) (One Difference, Multiple Rates, Effect of Beginning Balance versus No Beginning Deferred Taxes) At the end of 2019, Lucretia McEvil Company has $180,000 of cumula- tive temporary differences that will result in reporting the following future taxable amounts.

 2020 2021 2022 2023 

Tax rates enacted as of the beginning of 2018 are:

2018 and 2019 2020 and 2021 2022 and later

$ 60,000 50,000 40,000 30,000

$180,000

40% 30% 25%

Exercises 19-47

McEvils taxable income for 2019 is $320,000. Taxable income is expected in all future years.

Instructions

  1. Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2019, assuming that there were no deferred taxes at the end of 2018.

  2. PreparethejournalentryforMcEviltorecordincometaxespayable,deferredincometaxes,andin- come tax expense for 2019, assuming that there was a balance of $22,000 in a Deferred Tax Liability account at the end of 2018.

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