Respuesta :
Answer:
a) Taxable Income = $65,200
Income Taxes Payable = $19,560
b) Debit Income tax Expense $19,560 Credit Income Tax payable $19,560
Debit Income Tax Expense $11,610 Credit Deferred Tax $11,610
Debit Profit and loss Account $31,170 Credit Income Tax Expense $31,170
Explanation:
PreTax Income $66,100
1 . Depreciation -$14,800
2 . Rent +$23,900
3 . Fines -$10,000
Taxable Income $65,200
Income Tax Payable (30%) $19,560
Taxable income is in few words net income computed by The Taxman using tax laws and methods. in some cases the Accountant and Taxman can disagree on some things therefore creating temporal and permanent difference. Hence we adjust the Pretax income to arrive at Taxable income.
Income Tax Expense = Income Tax Payable + Deferred tax
Deferred tax arises from temporal difference (Carrying amount - Tax Base)
Deferred Tax = (14,800 * 30%) + ($23,900*30%)
= $4,440 + $7,170
= $11,610
Fines are permanent difference therefore no differed tax arises from them.
Answer:
A1. Taxable income is $85,800
A2. Income tax payable is $19,830
B.
B.
Income tax expense will be the tax rate applied to the Tax Payable amount of $85,800 = $25,740
Whereas the Tax Payable was worked out in the part 1 of our solution as $19,830. This leaves us with an under provision of taxes of $5,910. This $5,910 under provision is referred to as the Deferred tax provision.
Journal Entries
Income tax expense
Debit Income tax payable account with $19,830
Debit Deferred income tax liability Account with $5,910
Credit Cash with $25,740
(Being payment of 2020 Income tax expense to the IRS)
Deferred income tax
Debit Deferred Income tax Account with $5,910
Credit Deferred income tax Liability Account with $5,910
(Being deferred income tax liability for 2020)
Income tax payable
Debit income tax Account with $19,830
Credit Income tax Payable Account with $19,830
(Being Income tax payable on
income from 2020)
Explanation:
Vaughn company
Taxable income is income reviewed from the eyes of the tax authority.
There are some elements of the income statement that are allowable and some not allowable for tax deductions subject to the IRS rules. These are to be considered in finalising the Business Taxable income
Pretax income from financial statement for 2020 = $66,100
Deduct Tax adjustments on Asset Written down Value = -$14,800
Add back Rent received in advance = $23,900
Add back fines on pollution = $10,600
TAXABLE INCOME = $85,800
Income tax Payable on the other hand is a provision made for tax liability based on income arising from the Financial statement. It is an Accounting provision not calculated by the Tax authorities.
In this case, Gross Income was declared to be $66,100
Applying 30% on that gives us our income Tax payable = $19,830
B.
Income tax expense will be the tax rate applied to the Tax Payable amount of $85,800 = $25,740
Whereas the Tax Payable was worked out in the part 1 of our solution as $19,830. This leaves us with an under provision of taxes of $5,910. This $5,910 under provision is referred to as the Deferred tax provision.
Journal Entries
Income tax expense
Debit Income tax payable account with $19,830
Debit Deferred income tax liability Account with $5,910
Credit Cash with $25,740
(Being payment of 2020 Income tax expense to the IRS)
Deferred income tax
Debit Deferred Income tax Account with $5,910
Credit Deferred income tax Liability Account with $5,910
(Being deferred income tax liability for 2020)
Income tax payable
Debit income tax Account with $19,830
Credit Income tax Payable Account with $19,830
(Being Income tax payable on
income from 2020)
