Question

Blossom Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $54,000 in 2021, $58,900 in 2022, and $64,300 in 2023. Blossom’s pretax financial income for 2020 is $272,300, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020.

A. Compute taxable income and income taxes payable for 2020.

Taxable income		$enter a dollar amount
Income taxes payable		$enter a dollar amount

B. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

C.

Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.”. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Blossom Corporation Income Statement (Partial) choose the accounting period                                                                      December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
select an income statement item                                                                      CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		$enter a dollar amount
select an opening section name                                                                      CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
select an income statement item                                                                      CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues	$enter a dollar amount
select an income statement item                                                                      CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues	enter a dollar amount
		enter a subtotal of the two previous amounts
select a closing name for this statement                                                                      CurrentDeferredDividendsExpensesIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		$enter a total net income or loss amount

Answer 1

Answer:
Compute taxable income and income taxes payable for 2020.
Pretax financial income	$272,300
Less: Temporary Difference
2021	($54,000)
2022	($58,900)
2023	($64,300)
Taxable Income	$95,100
Tax rate	30%
Income taxes payable ($95,100 x 30%)	$28,530

b)Prepare the journal entry to record income tax expense
Date	Account titles and Explanation	Debit	credit
December 31 ,2020	Income tax expense (285200*30%)	$81,690
	Deferred tax liability          ($54,000 + $58,900 +$64,300 ) x 30%		$53,160
	Income tax payable		$28,530

C) Prepare the income tax expense section of the income statement
Particulars	Amount (in $)	Amount (in $)
Income Before Income Taxes		$272,300
Less: Income Tax Expense
- Current	($28,530)
Deferred	($53,160)	($81,690)
Net Income		$190,610