Question

Oriole Corporation began 2020 with a $54,280 balance in the Deferred Tax Liability account. At the...

Oriole Corporation began 2020 with a $54,280 balance in the Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $413,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $619,500, the tax rate for all years is 20%, and taxable income for 2020 is $477,900.

Compute income taxes payable for 2020.
Income taxes payable $enter Income taxes payable in dollars
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).)
Oriole Corporation
Income Statement (Partial)

choose the accounting period

December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020

select an income statement item

CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

$enter a dollar amount
select an opening section name

CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

select an income statement item

    Current    Deferred    Dividends    Expenses    Income before Income Taxes    Income Tax Expense    Net Income / (Loss)    Retained Earnings, January 1    Retained Earnings, December 31    Revenues    Total Expenses    Total Revenues    

$enter a dollar amount
select an income statement item

    Current    Deferred    Dividends    Expenses    Income before Income Taxes    Income Tax Expense    Net Income / (Loss)    Retained Earnings, January 1    Retained Earnings, December 31    Revenues    Total Expenses    Total Revenues    

enter a dollar amount
enter a subtotal of the two previous amounts
select a closing name for this statement

CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues

$enter a total net income or loss amount

Homework Answers

Answer #1
Temporary difference arising during 2020
giving rise to future taxable amounts
141600 =413000-(54280/20%)
1
Taxable income 477900
X Tax rate 20%
Income taxes payable 95580
2
Account Titles and Explanation Debit Credit
Income tax expense 123900
        Deferred tax liability 28320 =141600*20%
        Income taxes payable 95580
3
Income statement
For the year ended December 31, 2020
Income before income taxes 619500
Income tax expense
Current 95580
Deferred 28320
123900
Net income/(loss) 495600
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