Answer:
The correct options are as follows:
c. debit tax expense of $24,000.
d. credit taxes payable of $22,800.
e. credit deferred tax liability of $1,200.
Explanation:
In the question, we are given the following:
Enacted tax rate = 30%
Pretax income for the year = $80,000
Taxable income = $76,000
The following can now be calculated:
Tax expense = Pretax income for the year * Enacted tax rate = $80,000 * 30% = $24,000
Tax payable = Taxable income * Enacted tax rate = $76,000 * 30% = $22,800
Excess of Tax expense over Tax payable = Tax expense - Tax payable = $24,000 - $22,800 = $1,200
The above will then be recorded as follows:
Debit tax expense of $24,000.
Credit taxes payable of $22,800.
Credit deferred tax liability of $1,200.
Therefore, the correct options are as follows:
c. debit tax expense of $24,000.
d. credit taxes payable of $22,800.
e. credit deferred tax liability of $1,200.
