Question

Culver Company has the following two temporary differences between its income tax expense and income taxes payable.

Answer 1

Answer:

Journal entries

Explanation:

The journal entries are as follows

For 2020

Income tax expense $174,600

Deferred tax asset  $4,000         ($20,000 × 20%)

           To Income tax payable   $172,720        ($863,600 × 20%)

           To Deferred tax liability   $5,880           ($29,400 × 20%)

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

For 2021

Income tax expense $173,200

Deferred tax asset  $1,980      ($9,900 × 20%)

           To Income tax payable   $167,380        ($836,900 × 20%)

           To Deferred tax liability   $7,800          ($39,000 × 20%)

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

For 2020

Income tax expense $174,600

Deferred tax asset  $1,660       ($8,300 × 20%)

           To Income tax payable   $189,140        ($945,700 × 20%)

           To Deferred tax liability   $1,920        ($9,600 × 20%)

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