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Smyrna Company had financial and taxable incomes as follows: 2016 2017 2018 Pretax financial income $150,000 $140,000 $135,000 Taxable income 115,000 140,000 170,000 The tax
- Smyrna Company had financial and taxable incomes as follows:
2016 2017 2018
Pretax financial income $150,000 $140,000 $135,000
Taxable income 115,000 140,000 170,000
The tax rate for all three years was 30%.
Required:
a. Prepare the journal entries to record income taxes for all three years.
b. Explain why the taxes paid in 2018 are different from the tax return and the amount reported in the financial statements and provide an example of what could cause this difference.
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