Answer:
a. Debit Credit
deferred income taxes $5,400
Income tax expense $155,600
Income tax payable $161,000
b. No valuation account related to the deferred tax asset is in existence at the end of 2019, therefore no record should be make
Explanation:
a. In order to record the income tax expense, deferred income taxes, and income taxes payable for 2017 we would have to make the following calculations as follows:
deferred income taxes=($407,000×20%)-$76,000
deferred income taxes=$5,400
Income tax payable=$805,000×20%
Income tax payable=$161,000
Income tax expense=$161,000-$5,400
Income tax expense=$155,600
Therefore, the record of income tax expense, deferred income taxes, and income taxes payable for 2017, assuming that it is more likely than not that the deferred tax asset will be realized in full would be as follows:
Debit Credit
deferred income taxes $5,400
Income tax expense $155,600
Income tax payable $161,000
b. No valuation account related to the deferred tax asset is in existence at the end of 2019, therefore no record should be make
