Answer:
a. $224,000
c. Journal Entry
Explanation:
a. Taxable income for 2017 = Pretax financial income - Temporary sales - Depreciation + Unearned rent
= $250,000 - $96,000 - $30,000 + $100,000
= $224,000
c. Journal Entry
Income tax expenses Dr, $111,200
($224,000 × 45%) + ($50,400 - $40,000)
Deferred tax assets Dr, $40,000
To income tax payable $100,800
($224,000 × 45%)
To Deferred tax liability $50,400
For computing deferred tax
Temporary differences Future taxable Tax rate (Assets) Liability
Installment sales $96,000 40% $38,400
Depreciation rent $30,000 40% $12,000
Unearned rent ($100,000) 40% ($40,000)
Totals $26,000 ($40,000) ($50,400)
