I have a question. I got right Deferred Tax Asset and $12,350 Income Tax Payable $173,740...

I have a question. I got right Deferred Tax Asset and $12,350 Income Tax Payable $173,740 but I got wrong Income Tax Expense and Deferred tax liability.
Bridgeport Inc. has two temporary differences at the end of 2016. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Bridgeport’s accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows.

	2017	2018	2019	2020
Taxable Amounts	42,700	45,900	64,300	81,400
Deductible Amounts		(13,600)	(18,900)
TOTALS	42,700	32,300	45,400	81,400

As of the beginning of 2016, the enacted tax rate is 34% for 2016 and 2017, and 38% for 2018–2021. At the beginning of 2016, the company had no deferred income taxes on its balance sheet. Taxable income for 2016 is $511,000. Taxable income is expected in all future years.

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016.

Expert Solution

Temporary Difference			Assets	Liability
Installment Sale	42,700	34%		14,518
Installment Sale (45900+64300+81400)	1,91,600	38%		72,808
Loss Accrual (13600+18900)	-32,500	38%	-12,350
	2,01,800		12,350	87,326
	DR	CR
Income Tax Expense	2,48,716
Deferred Tax Asset	12,350
Income Tax Payable 511000*.34		1,73,740
Deferred Tax Liability		87,326

ekkarill92 answered 1 year ago

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