In: Accounting
Illusions Inc. just completed its second year of operations and has a deferred tax asset of? $47,500 related to a net operating loss of? $125,000 from the previous year. In the current year Illusions generates? $400,000 in revenues and incurs? $250,000 in expenses. There are no permanent or temporary? book-tax differences. Assuming the same tax rate as last? year, what amount will Illusions record for Income Tax Payable in the current? year?
A |
Deferred Tax Assets |
$ 47,500.00 |
B |
Net Operating Loss |
$ 125,000.00 |
C= A/B |
Tax Rate |
38% |
A |
Current Revenues |
$ 400,000.00 |
B |
Expenses |
$ 250,000.00 |
C= A - B |
Net Income |
$ 150,000.00 |
D |
Loss set off |
$ (125,000.00) |
E = C + D |
Taxable Income |
$ 25,000.00 |
F |
Tax Rate |
38% |
G = E x F |
Income Tax Payable |
$ 9,500.00 |
Accounts title |
Debit |
Credit |
Income Tax Expense |
$ 57,000.00 |
|
Deferred Tax Assets |
$ 47,500.00 |
|
Income Taxes Payable |
$ 9,500.00 |