THIS IS THE LAST part JAIN

The following facts relate to Alschuler Corporation.

1.

Deferred tax liability, January 1, 2012, $53,280.

2.

Deferred tax asset, January 1, 2012, $0.

3.

Taxable income for 2012, $153,180.

4.

Pretax financial income for 2012, $222,000.

5.

Cumulative temporary difference at December 31, 2012, giving rise to future taxable amounts, $293,040.

6.

Cumulative temporary difference at December 31, 2012, giving rise to future deductible amounts, $46,620.

7.

Tax rate for all years, 30%.

8.

The company is expected to operate profitably in the future.

(a)

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Compute income taxes payable for 2012.

Income taxes payable

$

Taxable income

$153,180

Enacted tax rate

30

%

Income taxes payable

$

45,954

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(b)

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2012.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

Deferred Tax

Temporary Difference

Future Taxable
(Deductible) Amounts

Tax Rate

(Asset)

Liability

First one

$293,040

30

%

$87,912

Second one

(46,620

)

30

%

$(

13,986

)

Totals

$246,420

$(13,986

)

$87,912

*Because of a flat tax rate, these totals can be reconciled: $246,420 x 30% = $(13,986) + $87,912.

Deferred tax liability at the end of 2012

$87,912

Deferred tax liability at the beginning of 2012

53,280

Deferred tax expense for 2012 (increase required in deferred tax liability)

$

34,632

Deferred tax asset at the end of 2012

$13,986

Deferred tax asset at the beginning of 2012

0

Deferred tax benefit for 2012 (increase required in deferred tax asset)

$ (13,986

)

Deferred tax expense for 2012

$34,632

Deferred tax benefit for 2012

(13,986

)

Net deferred tax benefit for 2012

20,646

Current tax expense for 2012 (Income taxes payable)

45,954

Income tax expense

for 2012

$

66,600

Prepare the income tax expense section of the income statement for 2012.

$

$

$

Havaci Company
Income Statement (Partial)
Year ended December 31, 2012

Income tax expense
66,600

Deferred Tax Ass

13,986

Income Taxes Payable

45,954

Deferred Tax Liability

34,632

45954

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