PROBLEM:

The information that follows pertains to Julia Company: (a.) Temporary differences for the year 2013 are summarized below. Expenses deducted in the tax return, but not included in the income statement:

Expenses reported in the income statement, but not deducted in the tax return: Warranty expense 9,000 (b.) No temporary differences existed at the beginning of 2013. (c.) Pretax accounting income was $67,000 and taxable income was $8,000 for 2013. (d.) There were no permanent differences. (e.) The tax rate is 30%. Required: Calculate the amount of Income Tax Payable for the 2013 tax year. Show all work.

Prepare the journal entry to record the tax provision for 2013. Provide supporting computations.

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