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alexira [117]
3 years ago
13

In 2016, its first year of operations, Wilber Company reported pretax accounting income of $60,000. Included in the $60,000 was

an expense for accrued, unpaid warranty costs of $8,000, which are not deductible until paid for income tax purposes. Wilber's income tax rate was 20%. The entry to record the income tax expense would include a:
A. credit to Income Taxes Payable for $12,000.
B. credit to Income Tax Expense for $12,000.
C. debit to Deferred Tax Asset for $1,600.
D. credit to Deferred Tax Liability for $1,600.
Business
1 answer:
Alex Ar [27]3 years ago
3 0

Answer:

credit to Deferred Tax Liability for $1,600.

Explanation:

Deferred tax liability is a tax expense that accrued within one accounting period but is payable at a future period.

The journal entries on creation of the deferred tax liability includes a debit to Income tax expense and a credit to deferred tax liability.

On settling of the deferred tax we debit deferred tax liability and credit Income tax expense.

In this instance the income tax rate is 20%. Warranty cost of $8,000 is deferred.

Deferred tax= 0.2 * 8,000= $1,600

So the journal entry will be a debit to Income tax expense of $1,600 and a credit to Deferred tax liability of $1,600

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jok3333 [9.3K]

Answer:

The correct answer will be Option A (unlimited).

Explanation:

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Other available scenarios aren't connected to the situation in question. So alternative A, therefore, the perfect solution.

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3 years ago
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romanna [79]

Answer:

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Answer:

b- $2,400

Explanation:

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