Question

Simple Tax Accrual:
Tyler Corp. reports pretax accounting income of $400,000 in 2017 when the tax rate is 35%. Due to a single temporary difference that will reverse in 2018 when the tax rate is 21%, taxable income is $300,00.
a) Prepare the compound journal entry to record Tyler Corp's 2017 income taxes.
b) For each abbout included in the journal entry for part a, show its presentation within the balance sheet at the end of 2017 or the income statement for 2017.

Answer 1

a.

	Account Titles	Debit	Credit
		$	$
December 31, 2017	Income Tax Expense	140,000
	Deferred Tax Liability ( 400,000 - 300,000) x 35%		35,000
	Income Taxes Payable ( 300,000 x 35%)		105,000

b. Tyler Corp

Balance Sheet ( Partial)

December 31, 2017

Liabilities	$
Current Liabilities
Income Taxes Payable	105,000
Deferred Tax Liability	35,000

The Income Tax Expense will be deducted from Pretax Accounting Income in the Income Statement for the year ended December 31, 2017.