In: Accounting
White Inc. had the following amounts that may or may not affect taxable income:
Deferred rent revenue…………………………………………$25,000
Macrs depreciation in excess of book..…………………..20,000
Interest income from municipal bonds…………………..20,000
Accrued warranty expense……………………………………..25,000
Accrued interest income earned on deposits.…………10,000
Prepaid insurance paid 12/20/2019……………………… 10,000
Taxable income is $200,000 and the tax rate for 2019 is 40%
Required:
1.Prepare a schedule to compute pretax accounting income.
2. Prepare the appropriate journal entry to record 2019 income tax expense.
3. Assume that on January 1, 2019 the Deferred tax asset account had a balance of $10,000. Prepare the appropriate journal entry to record 2019 income tax expense if taxable income was $200,000 and the 2019 tax rate was 40%.