Question

Deferred Tax Calculations (Appendix)

Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:

2015	$244,000
2016	279,000
2017	327,000

When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $101,000. The equipment is expected to last three years and have a(n) $8,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $58,000 in 2015, $23,000 in 2016, and $12,000 in 2017. Wyhowski's tax rate is 35%.

Required:

Enter all amounts as positive numbers.

1. How much did Wyhowski pay in income tax each year? If required, round all calculations to the nearest dollar.

Year	Taxes Paid
2015	$fill in the blank 1
2016	$fill in the blank 2
2017	$fill in the blank 3

2. How much income tax expense did Wyhowski record each year?

Year	Income Tax Expense
2015	$fill in the blank 4
2016	$fill in the blank 5
2017	$fill in the blank 6

3. What is the balance in the Deferred Income Tax account at the end of 2015, 2016, and 2017? If your answer is zero, enter "0". If required, round all calculations to the nearest dollar.

Year	Balance	Debit or Credit
2015	$fill in the blank 7	Credit
2016	$fill in the blank 9	Credit
2017	$fill in the blank 11	No balance

Answer 1

Part-1
Year	Tax Paid
2015	$75,950.00
2016	$100,450.00
2017	$121,100.00

Part-2
Year	Tax Expense
2015	$85,400.00
2016	$97,650.00
2017	$114,450.00

Part-3
Year	Debit or Credit	Amount
2015	Credit	$9,450.00
2016	Debit	$6650
2017	Nil Balance	0

Detail working Note for your easy understanding

Working Note: Wyhowski Inc.
	2015	2016	2017
Incomebefore tax (a)	$244,000.00	$279,000.00	$327,000.00
Add: Depreciaiton as per Books	$31,000.00	$31,000.00	$31,000.00
Less: Deprecoation as per Tax	$58,000.00	$23,000.00	$12,000.00
Taxable Income (b)	$217,000.00	$287,000.00	$346,000.00
Income Tax Payable (b*35%)	$75,950.00	$100,450.00	$121,100.00
Incoem Tax Expensse (a*35%)	$85,400.00	$97,650.00	$114,450.00
Deferred Income tax Expense	$9,450.00	-$2,800.00	-$6,650.00

Working Note
Depreciaiton as per SLM= (101000-8000)/3=$31000