Bandung Corporation began 2014 with a $92,000 balance in the Deferred Tax Liability account.

| June 5, 2016

Question
Bandung Corporation began 2014 with a $92,000 balance in the Deferred Tax Liability account.

E19-3 (One Temporary Difference, Future Taxable Amounts, One Rate, Beginning Deferred

Taxes) Bandung Corporation began 2014 with a $92,000 balance in the Deferred Tax Liability account. At the end of 2014, the related cumulative temporary difference amounts to $350,000 and it will reverse evenly over the next 2 years. Pretax accounting income for 2014 is $525,000, the tax rate for all years is 40%, and taxable income for 2014 is $405,000

Instructions

(a) Compute income taxes payable for 2014.

(b)Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014.

(c) Prepare the income tax expense section of the income statement for 2014, beginning with the line “Income before income taxes.”

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