Answer:
The Summerlin Company
Journal Entries:
December 31, 2021:
Debit Income Tax Expense $170,000
Credit Income Tax Payable $146,000
Credit Deferred Tax Liability $24,000
To record the income tax expense for the year.
December 31, 2022:
Debit Income Tax Expense $138,000
Debit Deferred Tax Asset $9,600
Credit Income Tax Payable $147,600
To record income tax expense for the year.
December 31, 2023:
Debit Income Tax Expense $103,750
Debit Deferred Tax Asset $7,500
Credit Income Tax Payable $111,250
To record income tax expense for the year.
December 31, 2024:
Debit Income Tax Expense $113,750
Debit Deferred Tax Asset $1,500
Credit Income Tax Payable $115,250
To record income tax expense for the year.
Explanation:
a) Data and Calculations:
Pretax Accounting Income:
Year Accounting Temporary Taxable Tax Rate Income Tax
Income Differences Income
2021 $425,000 -$60,000 $365,000 40% $146,000
2022 345,000 +24,000 369,000 40% 147,600
2023 415,000 +30,000 445,000 25% 111,250
2024 455,000 +6,000 461,000 25% 115,250
Year Tax Expense Income Tax Differences
2021 $170,000 $146,000 $24,000 DTL
2022 138,000 147,600 9,600 DTA
2023 103,750 111,250 7,500 DTA
2024 113,750 115,250 1,500 DTA
Total Deferred Tax Liability = $24,000
Total Deferred Tax Assets = 18,600
Unrecoverable DTA = $5,400
