Question

You are the accountant for Auxerre, and you have to prepare the journal for income taxes....

You are the accountant for Auxerre, and you have to prepare the journal for income taxes. You have gathered the following information for 2020:

  1. Deferred tax liability, January 1, 2020, $40,000.
  2. Deferred tax asset, January 1, 2020, $0.
  3. Taxable income for 2020, $127,000.
  4. Cumulative temporary difference on December 31, 2020, giving rise to future taxable amounts, $220,000.
  5. Cumulative temporary difference on December 31, 2020, giving rise to future deductible amounts, $35,000.
  6. There is one permanent difference between taxable and pretax financial income due to a $5,000 fine imposed by OSHA.
  7. The tax rate is 40% for all years.
  8. The company is expected to operate profitably in the future.

Prepare the journal entry to record income taxes for 2012.

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