Question

4. Ayrshire had $54,000 in net income before tax. The only income or expense that was different was depreciation. Book and tax depreciation and tax rates for 2016 through 2018 for an asset purchased in 2016 was as follows:

   	Book	Tax	Tax Rate
   2016	8,000	16,000	30%
   2017	8,000	12,800	32%
   2018	8,000	10,240	35%
   2019			33%
   Prepare the journal entry for income taxes

Answer 1

Assuming $ 54000 is net income every year after book depreciation.

2016	Account	Dr	Cr
	Income tax expense	$16,200
	Income tax payable		$13,800
	Deferred tax liability		$2,400
2017	Account	Dr	Cr
	Income tax expense	$17,280
	Income tax payable		$15,744
	Deferred tax liability		$1,536
2018	Account	Dr	Cr
	Income tax expense	$18,900
	Income tax payable		$18,116
	Deferred tax liability		$160