Answer:
A.Taxable income $95,000
Enacted tax rate (40%*$95,000)
Income tax payable $38,00
B.Dr Income Tax Expense 80,000
Dr Deferred Tax Asset 14,000
Cr Income Tax Payable 38,000
Cr Deferred Tax Liability 56,000
C.Net income $120,000
Explanation:
Compututation of income taxes payable for 2014.
Taxable income $95,000
Enacted tax rate (40%*$95,000)
Income tax payable $38,000
(b) Journal entry
Dr Income Tax Expense 80,000
Dr Deferred Tax Asset 14,000
Cr Income Tax Payable 38,000
Cr Deferred Tax Liability 56,000
c)
Income before income taxes $200,000
Less Income tax expense
(Current $38,000+Deferred 42,000) 80,000
Net income $120,000
