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Bandung Corporation began 2020 with a $46,000 balance in the ­Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $350,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $525,000, the tax rate for all years is 20%, and taxable income for 2020 is $405,000. Instructions a.    Compute income taxes payable for 2020. b.    Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. c.    Prepare the income tax expense section of the income statement for 2020 beginning with the line “Income before income taxes.”

Bandung Corporation began 2020 with a $46,000 balance in the ­Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $350,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $525,000, the tax rate for all years is 20%, and taxable income for 2020 is $405,000. Instructions a.    Compute income taxes payable for 2020. b.    Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. c.    Prepare the income tax expense section of the income statement for 2020 beginning with the line “Income before income taxes.”

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bandung Corporation began 2020 with a $46,000 balance in the ­Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $350,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $525,000, the tax rate for all years is 20%, and taxable income for 2020 is $405,000.

Instructions

a.    Compute income taxes payable for 2020.

b.    Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020.

c.    Prepare the income tax expense section of the income statement for 2020 beginning with the line “Income before income taxes.”

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