You are the accountant for Auxerre, and you have to prepare the
journal for income taxes. You have gathered the following
information for 2020:
- Deferred tax liability, January 1, 2020, $40,000.
- Deferred tax asset, January 1, 2020, $0.
- Taxable income for 2020, $127,000.
- Cumulative temporary difference on December 31, 2020, giving
rise to future taxable amounts, $220,000.
- Cumulative temporary difference on December 31, 2020, giving
rise to future deductible amounts, $35,000.
- There is one permanent difference between taxable and pretax
financial income due to a $5,000 fine imposed by OSHA.
- The tax rate is 40% for all years.
- The company is expected to operate profitably in the
future.
Prepare the journal entry to record income taxes for 2012.