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Tanner Corporation begins operations in 2018 and reports the following amounts of pretax financial income and taxable income for the years 2018 through 2022. Tanner
Tanner Corporation begins operations in 2018 and reports the following amounts of pretax financial income and taxable income for the years 2018 through 2022. Tanner has only one temporary difference and only one originating or reversing difference occurs in any single year. Tanner is subject to a tax rate of 30% for all the years.
Year | Pretax Financial Income | Taxable Income |
2018 | $70,000 | $50,000 |
2019 | 85,000 | 75,000 |
2020 | 90,000 | 90,000 |
2021 | 82,000 | 92,000 |
2022 | 93,000 | 113,000 |
|
Requirement:
1. Prepare the income tax journal entry for each year.
2. Next Level What do you notice about the balance in the deferred taxes over the 5 years?
1. Prepare the income tax journal entry for each year on December 31. General Journal Instructions PAGE 2018 PAGE 2019 PAGE 2020 PAGE 2021 PAGE 2022 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 Next Level 2. What do you notice about the balance in the deferred taxes over the 5 years? The deferred tax liability increases in because There is no change in because The deferred tax liability decreases in because
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