Question

Bridgeport Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $57,500 in 2021, $62,100 in 2022, and $66,600 in 2023. Bridgeport’s pretax financial income for 2020 is $314,600, and the tax rate is 30% for all years. There are no deferred taxes at the beginningCompute taxable income and income taxes payable for 2020.

Taxable income
Income taxes payable

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Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.”. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

a
Taxable income	128400		=314600-57500-62100-66600
X Tax rate	30%
Income taxes payable	38520
b
Account Titles and Explanation	Debit	Credit
Income tax expense	94380
Deferred tax liability		55860	=(57500+62100+66600)*30%
Income taxes payable		38520
c
Income statement
For the year ended December 31, 2020
Income before income taxes		314600
Income tax expense
Current	38520
Deferred	55860
		94380
Net income/(loss)		220220