Question

The following information is available for Blue Corporation for 2019 (its first year of operations).

1.		Excess of tax depreciation over book depreciation, $37,000. This $37,000 difference will reverse equally over the years 2020–2023.
2.		Deferral, for book purposes, of $18,200 of rent received in advance. The rent will be recognized in 2020.
3.		Pretax financial income, $296,200.
4.		Tax rate for all years, 20%.

Compute taxable income for 2019.

Taxable income

$enter Taxable income in dollars

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. (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
enter an account title	enter a debit amount	enter a credit amount

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming taxable income of $314,000. (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
enter an account title	enter a debit amount	enter a credit amount

Answer 1

1
Pretax financial income	296200
Less: Excess of tax depreciation	-37000
Add: Rent received in advance	18200
Taxable income	277400
2
Account Titles and Explanation	Debit	Credit
Income tax expense	59240
Deferred tax asset	3640		=18200*20%
Deferred tax liability		7400	=37000*20%
Income tax payable		55480	=277400*20%
3
Account Titles and Explanation	Debit	Credit
Income tax expense	64590
Deferred tax liability	1850		=7400/4
Deferred tax asset		3640
Income tax payable		62800	=314000*20%