Question

Munoz Corp.'s books showed pretax financial income of $3,600,000 for the year ended December 31, 2021. In the computation of federal income taxes, the following data were considered:

Gain on an involuntary conversion                                                   $1,560,000

(Munoz has elected to replace the property within the statutory

      period using total proceeds.)

Depreciation deducted for tax purposes in excess of depreciation

      deducted for book purposes                                                              240,000

Federal estimated tax payments, 2021   200,000

Enacted federal tax rate, 2021                                                                       20%

Prepare the accounting entry for taxes on Munoz Corp’s Books for 2021.  

Answer 1

Particulars	$
Temporary differences
Gain on involuntary conversion not taxable in current year	$       1,560,000
Depreciation excess charged	$          240,000
Total Deferred liability	$       1,800,000
Future enacted tax rate	20%
Deferred tax liability	$          360,000

Date	Particulars	Debit $	Credit $
	Income tax expense	$560,000
	Deferred tax liability		$360,000
	Income tax payable		$2000,000

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