Question

Carla Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $57,000 in 2021, $61,800 in 2022, and $67,300 in 2023. Carla’s pretax financial income for 2020 is $286,600, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020.

Compute taxable income and income taxes payable for 2020.

Taxable income		$enter a dollar amount
Income taxes payable

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020

Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.”.

Answer 1

Answer
a)	Total reversal amount = 57,000+61,800 +67,300 = $186,100
	Taxable income =Pretax financial income -Future taxable amount
	= 286,600-186,100
	= $100,500
	Income taxes payable =Taxable income *tax rate
	= 100,500*30%
	= 30,150
b)
Date	Account title	Debit	credit
31-12-2020	Income tax expense (286600*30%)	$         85,980
	Deferred tax liability		$     55,830
	Income tax payable		$     30,150
c)	Income before income tax	$      2,86,600
	less:Income tax expense	$        -85,980
	Net income	$      2,00,620
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