a. Compute taxable income and income taxes payable for 2021.

Pretax Financial Income for 2021 $ 400,000

Temporary difference resulting in future taxable
amounts in 2022 $ (55,000)
in 2023 $ (60,000)
in 2024 $ (75,000)
Taxable income for 2021 $ 210,000

Taxable income for 2021 $ 210,000

Enacted tax rate 30%
income taxes payable for 2021 $ 63,000

b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable
Future Years
Description
2022 2023
Future Taxable (deductible) Amount $ 55,000 $ 60,000
Tax Rate 30% 30%
Deffered Tax Liablility (asset) $ 16,500 $ 18,000

Deffered Tax Liability at the end of 2021 $ 57,000

Deffered Tax Liability at the beginning of 2021 $ -
Deffered Tax Expense for 2021 (Increase in deffered tax
liability) $ 57,000
Current Tax Expense for 2021 (Income Taxes Payable) $ 63,000
Income Tax Expense for 2021 $ 120,000

Dr. Income Tax Expense $ 120,000

Journal Entries Cr. Income Taxes Payable $ 63,000
Cr. Deffered Tax Liability $ 57,000

c. Prepare the income tax expense section of the income statement for 2021, beginning with the line “Income
Income Before Income Taxes $ 400,000
Income Tax Expense
Current $ 63,000
Deffered $ 57,000 $ 120,000
Net Income $ 280,000
xes, and income taxes payable for 2021.
ture Years
Total
2024
$ 75,000 $ 190,000
30%
$ 22,500 $ 57,000

eginning with the line “Income before income taxes.”

a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2021, 2022
Description 2021 2022
Dr. Income Tax Expense ₩ 336,000,000 ₩ 364,000,000
Journal
Entries Dr. Deferred Tax Asset ₩ 8,000,000 ₩ 4,000,000
Cr. Deferred Tax Liability ₩ 12,000,000 ₩ 16,000,000
Cr. Income Taxes Payable ₩ 332,000,000 ₩ 352,000,000

b. Assuming there were no temporary differences prior to 2021, indicate how deferred taxes will be reported on the 2023 st
Deferred Tax Asset ₩ 15,200,000
Deferred Tax Liability ₩ 36,000,000
Net Non-Current Liability ₩ 20,800,000

c. Prepare the income tax expense section of the income statement for 2023, beginning with the line “Pretax financial incom

Pretax Financial Income 2023 $ 945,000,000

Income Tax Expense
Current $ 373,200,000
Deffered $ 4,800,000 $ 378,000,000
Net Income $ 567,000,000
income taxes payable for 2021, 2022, and 2023.
2023
₩ 378,000,000
₩ 3,200,000
₩ 8,000,000
₩ 373,200,000

taxes will be reported on the 2023 statement of financial position. Jeonbuk’s product warranty is for 12 months.

g with the line “Pretax financial income.”

a. Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 40% was not e
Futu
Description
2022
Pretax Financial Income € 290,000
Nondeductible expense € 30,000
Subtotal € 320,000
Taxable Income € 180,000
Tax Rate 35%
Income Taxes Payable € 63,000
Temporary Difference Organinating (reversing) € 140,000
Cumulative Temporary Difference at end of year € 140,000

Future Taxable
Year Temporary Difference Tax Rate
(deductible) Amount
2022 Depreciation € 140,000 35%
2023 Depreciation € 265,000 40%
2024 Depreciation € 385,000 40%
2025 Depreciation € 275,000 40%

Description 2022 2023

Dr. Income Tax Expense € 112,000 € 140,000
Cr. Income Tax Payable € 63,000 € 90,000
Journal
Entries Cr. Deferred Tax Liability € 49,000 € 50,000
Dr. Income Tax Expense
Dr. Deferred Tax Liability
Cr. Income Tax Payable
Adjustment Dr. Income Tax Expense € 7,000
Entries Cr. Deferred Tax Liability € 7,000

Computating 2022 2023 (adjusment)

Deferred Tax Liability at end of year € 49,000 € 56,000
Deferred Tax Liability at Beginning of year € - € 49,000
Deferred Tax Benefit for year € 49,000 € 7,000
Current Tax Expense for Year € 63,000 € -
Income Tax Expense € 112,000 € 7,000

b. Prepare the income statement for 2023, beginning with income before income taxes.

Pretax Financial Income 2023 $ 320,000

Income Tax Expense
Current $ 90,000
Deffered $ 50,000
Adjustment due to change in tax rate $ 7,000 $ 147,000
Net Income $ 173,000
e tax rate to 40% was not enacted until the beginning of 2023.
Future Years
Total
2023 2024 2025
€ 320,000 € 350,000 € 420,000 € 1,380,000
€ 30,000 € 30,000 € 30,000
€ 350,000 € 380,000 € 450,000 € 1,500,000
€ 225,000 € 260,000 € 560,000
40% 40% 40%
€ 90,000 € 104,000 € 224,000
€ 125,000 € 120,000 € (110,000)
€ 265,000 € 385,000 € 275,000

Deferred Tax
Asset Liability
€ 49,000
€ 106,000
€ 154,000
€ 110,000

2024 2025
€ 152,000
€ 104,000
€ 48,000
€ 180,000
€ 44,000
€ 224,000

2023 2024 2025

€ 106,000 € 154,000 € 110,000
€ 56,000 € 106,000 € 154,000
€ 50,000 € 48,000 € (44,000)
€ 90,000 € 104,000 € 224,000
€ 140,000 € 152,000 € 180,000
 a. Prepare a schedule starting with pretax financial income in 2022 and ending with taxable income in 2022.
Schedule of Pretax Financial Income and Taxable income for 2022
Pretax Financial Income $ 750,000
Permanent Differences
Insurance Expense $ 9,000
Bond Interest Revenue $ (4,000)
Pollution Fines $ 4,200
$ 759,200
Temporary Difference
Depreciation Expense $ (30,000)
Installment Sales $ (25,000)
Warranty Expense $ 40,000
Taxable Income $ 744,200

Depreciation for Books ($300.000/5) $ 60,000

Depreciation Tax Return ($300.000 x 30%) $ 90,000
Difference $ 30,000

The Income Taxes Payable for 2022 is as Follows

Taxable Income $ 744,200
Tax Rate 30%
Income Taxes Payable $ 223,260

The computation of the deferred income taxes for 2022 is as follows

Temporary differences
Depreciation Expense ($(30,000) X 30%) (9,000) DTL
Installment Sales ((25,000) X 30%) (7,500) DTL
Warranty Expense (40,000 X 30%) 12,000 DTA

b. Prepare the journal entry for 2022 to record income taxes payable, income tax expense, and deferred inco

Dr. Income Tax Expense $ 227,760

Journal Dr. Deferred Tax Asset $ 12,000
Entry Cr. Deferred Tax Liability $ 16,500
Cr. Income Tax Payable $ 223,260

Deferred Tax Expense at end of year $ 16,500

Deferred Tax Benefit for year $ (12,000)
Net deferred tax expense $ 4,500
Current Tax Expense for Year $ 223,260
Income Tax Expense $ 227,760
with taxable income in 2022.

ax expense, and deferred income taxes.

Income Tax Refunds Receivable
Benefit Due to