Question
Johnson Company has the following two temporary differences between its income tax expense and income taxes payable. 2020 2021 2022 Pretax financial income $840,000 $910,000
Johnson Company has the following two temporary differences between its income tax expense and income taxes payable.
2020 2021 2022
Pretax financial income $840,000 $910,000 $945,000
Excess depreciation expense on tax return (30,000) (40,000) (10,000)
Excess warranty expense in financial income 20,000 10,000 8,000
Taxable income $830,000 $880,000 $943,000
The income tax rate for all years is 20%.
A. Assuming there were no temporary differences prior to 2020, prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020, 2021, and 2022.
B. Indicate how deferred taxes will be reported on the 2022 balance sheet. Cotton's product warranty is for 12 months.
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