Question

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

Answer 1

Answer:

The calculations and journal entries are shown below:

Explanation:

The computations are shown below:

a. The taxable income is

Pretax financial income  $302,100

Less: Excess of tax depreciation over book depreciation -$43,800

Add: Rent received in advance deferred for book purposes $18,100

Taxable income $276,400

b.  The journal entry is shown below:

Income tax expense $60,420  

Deferred tax asset (20% × $18,100) $3,620

           To Income tax payable (20% × $276,400) $55,280

           To Deferred tax liability (20% × $43,800) $8,760

(Being the income tax expense, deferred income taxes, and income taxes payable for 2019 is recorded)

c.  The journal entry is shown below:

Income tax expense $63,270  

Deferred tax liability ($8760 ÷ 4 years) $2,190  

         To Income tax payable (20% × $309,200)  $61,840

         To Deferred tax asset (20% × $18,100) $3,620

(Being the income tax expense, deferred income taxes, and income taxes payable for 20 is recorded)