Bridgeport Corporation has one temporary difference at the end of 2020 that will reverse and cause...

Bridgeport Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $57,500 in 2021, $62,100 in 2022, and $66,600 in 2023. Bridgeport’s pretax financial income for 2020 is $314,600, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020.

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Compute taxable income and income taxes payable for 2020.

Taxable income

Income taxes payable

(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.)

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Solutions

Expert Solution

A)
Taxable income = Pretax financial income (-) Cumulative Taxable Amounts = $ 314,600 (-) [ $ 57,500 + $ 62,100 + $ 66,600 ] = $ 314,600 (-) $ 186,200	$ 128,400

Income taxes payable ( $ 128,400 x 30% )	$ 38,520

Date	Account Titles and Explanations	Debit (in $ )	Credit (in $ )
2020	Income Tax Expense ($ 314,600 x 30% )	$ 94,380
	Income Taxes Payable ( $ 128,400 x 30% )		$ 38,520
	Deferred Tax Liability - Bal. Fig.		$ 55,860
	(To record income tax expense )

ekkarill92 answered 1 year ago

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