Question

The following facts relate to Sweet Corporation. A. Deferred tax liability, January 1, 2017, $67,200. B....

The following facts relate to Sweet Corporation.

A. Deferred tax liability, January 1, 2017, $67,200.
B. Deferred tax asset, January 1, 2017, $22,400.
C. Taxable income for 2017, $117,600.
D. Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, $257,600.
E. Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, $106,400.
F. Tax rate for all years, 40%. No permanent differences exist.
G.

The company is expected to operate profitably in the future.

1. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017.

ACCOUNT TITLES DEBIT CREDIT

2. Compute the effective tax rate for 2017. __________ %

Homework Answers

Answer #1

SOLUTION

1.

ACCOUNT TITLES DEBIT ($) CREDIT ($)
Income Tax Expense 62,720
Deferred Tax Asset * 20,160
Income Tax Payable ($117,600 *40%) 47,040
Deferred Tax Liability ** 35,840

*Deferred tax Asset -

Amount ($)
Deferred Tax asset at the end of 2017 ($106,400*40%) 42,560
Deferred Tax asset at the Beginning of 2017 22,400
Deferred tax asset for 2017 20,160

**Deferred tax liability -

Amount ($)
Deferred Tax liability at the end of 2017 ($257,600*40%) 103,040
Deferred Tax liability at the Beginning of 2017 67,200
Deferred tax expense for 2017 35,840

2. Effective tax rate for 2017 = $62,720 / $117,600 = 53.34%

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The following facts relate to Oriole Corporation. 1. Deferred tax liability, January 1, 2020, $36,000. 2....
The following facts relate to Oriole Corporation. 1. Deferred tax liability, January 1, 2020, $36,000. 2. Deferred tax asset, January 1, 2020, $12,000. 3. Taxable income for 2020, $126,000. 4. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $276,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $114,000. 6. Tax rate for all years, 20%. No permanent differences exist. 7. The company is expected to operate profitably in the...
The following facts relate to Blossom Corporation. 1. Deferred tax liability, January 1, 2020, $21,000. 2....
The following facts relate to Blossom Corporation. 1. Deferred tax liability, January 1, 2020, $21,000. 2. Deferred tax asset, January 1, 2020, $0. 3. Taxable income for 2020, $99,750. 4. Pretax financial income for 2020, $210,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $252,000. 6. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $36,750. 7. Tax rate for all years, 20%. 8. The company is expected to operate...
Exercise 19-05 The following facts relate to Pearl Corporation. 1. Deferred tax liability, January 1, 2020,...
Exercise 19-05 The following facts relate to Pearl Corporation. 1. Deferred tax liability, January 1, 2020, $21,600. 2. Deferred tax asset, January 1, 2020, $0. 3. Taxable income for 2020, $102,600. 4. Pretax financial income for 2020, $216,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $259,200. 6. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $37,800. 7. Tax rate for all years, 20%. 8. The company is expected...
The following facts relate to Crane Corporation. 1. Deferred tax liability, January 1, 2020, $25,000. 2....
The following facts relate to Crane Corporation. 1. Deferred tax liability, January 1, 2020, $25,000. 2. Deferred tax asset, January 1, 2020, $0. 3. Taxable income for 2020, $118,750. 4. Pretax financial income for 2020, $250,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $300,000. 6. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $43,750. 7. Tax rate for all years, 20%. 8. The company is expected to operate...
You are the accountant for Auxerre, and you have to prepare the journal for income taxes....
You are the accountant for Auxerre, and you have to prepare the journal for income taxes. You have gathered the following information for 2020: Deferred tax liability, January 1, 2020, $40,000. Deferred tax asset, January 1, 2020, $0. Taxable income for 2020, $127,000. Cumulative temporary difference on December 31, 2020, giving rise to future taxable amounts, $220,000. Cumulative temporary difference on December 31, 2020, giving rise to future deductible amounts, $35,000. There is one permanent difference between taxable and pretax...
Sheffield Corporation began 2017 with a $98,000 balance in the Deferred Tax Liability account. At the...
Sheffield Corporation began 2017 with a $98,000 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $324,200, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $493,800, the tax rate for all years is 40%, and taxable income for 2017 is $414,600. Compute income taxes payable for 2017. Income taxes payable $ Prepare the journal entry to record income tax expense, deferred income...
During 2017, Sheridan Co.’s first year of operations, the company reports pretax financial income at $274,600....
During 2017, Sheridan Co.’s first year of operations, the company reports pretax financial income at $274,600. Sheridan’s enacted tax rate is 45% for 2017 and 40% for all later years. Sheridan expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2017, are summarized as follows. Future Years 2018 2019 2020 2021 2022 Total Future taxable (deductible) amounts: Installment sales $32,500 $32,500 $32,500 $97,500 Depreciation...
During 2017, Windsor Co.’s first year of operations, the company reports pretax financial income at $274,600....
During 2017, Windsor Co.’s first year of operations, the company reports pretax financial income at $274,600. Windsor’s enacted tax rate is 45% for 2017 and 40% for all later years. Windsor expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2017, are summarized as follows. Future Years 2018 2019 2020 2021 2022 Total Future taxable (deductible) amounts: Installment sales $32,500 $32,500 $32,500 $97,500 Depreciation...
Oriole Corporation began 2020 with a $54,280 balance in the Deferred Tax Liability account. At the...
Oriole Corporation began 2020 with a $54,280 balance in the Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $413,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $619,500, the tax rate for all years is 20%, and taxable income for 2020 is $477,900. Compute income taxes payable for 2020. Income taxes payable $enter Income taxes payable in dollars Prepare the journal entry to record...
Vaughn Corporation began 2020 with a $49,680 balance in the Deferred Tax Liability account. At the...
Vaughn Corporation began 2020 with a $49,680 balance in the Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $378,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $567,000, the tax rate for all years is 20%, and taxable income for 2020 is $437,400. Compute income taxes payable for 2020. Income taxes payable Prepare the journal entry to record income tax expense, deferred income taxes,...