Question

# Blossom Corporation has one temporary difference at the end of 2020 that will reverse and cause...

Blossom Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of \$57,800 in 2021, \$62,500 in 2022, and \$67,300 in 2023. Blossom’s pretax financial income for 2020 is \$319,400, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020.

Part 1

Compute taxable income and income taxes payable for 2020.

 Taxable income \$enter a dollar amount \$enter a dollar amount

Part 2

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

Part 3

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).)

Blossom Corporation
Income Statement (Partial)

\$enter a dollar amount

select an opening section nameCurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income /

\$enter a dollar amount

enter a dollar amount

enter a subtotal of the two previous amounts

• Requirements

[1]

 A Pretax Income \$319,400 B Temporary difference \$187,600 C = A - B Taxable Income \$131,800 Answer D Tax rate 30% E = C x D Income tax payable \$39,540 Answer

[2]

 Accounts title Debit Credit Income Tax Expense \$95,820 Deferred tax expense (\$187600 x 30%) \$56,280 Income tax payable \$39,540 (to record income tax expense)

[3]

 Income Statement Pretax net income or Income before Income taxes \$319,400 Less: Income tax expense Current income tax \$39,540 Deferred tax expense \$56,280 \$95,820 Net Income \$223,580