Question

Shamrock Company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 Pretax financial income $844,000 $884,000 $948,000 Excess depreciation expense on tax return (30,800 ) (40,000 ) (9,500 ) Excess warranty expense in financial income 19,300 9,900 8,400 Taxable income $832,500 $853,900 $946,900 The income tax rate for all years is 40%. Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. (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.) Account Titles and Explanation Debit Credit 2017 2018 2019

Answer 1

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	A	B	C	D=A+B+C	E	F=D*E	G=B*E	H=C*E	I=G-H-F
Year	Pre Tax	Depreciation	Warranty	Taxable Income	Tax Rate	Income Tax Payable	Deferred Tax Liability	Deferred Tax Asset	Total Income Tax Expense
2017	844000	-30800	19300	832500	40%	333000	-12320	7720	337600
2018	884000	-40000	9900	853900	40%	341560	-16000	3960	353600
2019	948000	-9500	8400	946900	40%	378760	-3800	3360	379200
	Year			Account Title	Debit	Credit
	2017			Income Tax Expense	337600
				Deferred Tax Asset	7720
				Deferred Tax Liability		12320
				Income Tax Payable		333000
				(Recorded Income Tax for 2017)
	2018			Income Tax Expense	353600
				Deferred Tax Asset	3960
				Deferred Tax Liability		16000
				Income Tax Payable		341560
				(Recorded Income Tax for 2018)
	2019			Income Tax Expense	379200
				Deferred Tax Asset	3360
				Deferred Tax Liability		3800
				Income Tax Payable		378760
				(Recorded Income Tax for 2019)