Question

The following facts relate to Krung Thep Corporation:

1. Deferred tax      liability, January 1, 2015, $40,000
2. Deferred tax      asset, January 1, 2015, $0
3. Taxable income for      2015, $115,000
4. Pretax financial      income for 2015, $200,000
5. Cumulative      temporary difference at December 31, 2015, giving rise to future taxable      amounts, $220,000
6. Cumulative      temporary difference at December 31, 2015, giving rise to future      deductible amounts, $35, 000
7. Tax rate for all      years, 40%
8. The company is      expected to operate profitably in the future.

Instructions:

1. Compute income taxes payable for 2015.
2. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015.

Prepare the income tax expense section of the income statement for 2015, beginning with the line “income before income taxes.”

Answer 1