Question

In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $74 million. Taxable income is $300 million in 2021. No temporary differences existed at the beginning of the year, and the tax rate is 25%.
  
Prepare the appropriate journal entry to record income taxes in 2021.

Answer 1

General Journal	Debit	Credit
Income tax expense	56500000
Deferred tax asset	18500000		=74000000*25%
Income tax payable		75000000	=300000000*25%
(To record income taxes.)

Alternatively, if amounts are entered in millions:

General Journal	Debit	Credit
Income tax expense	56.5
Deferred tax asset	18.5
Income tax payable		75