Given the below information, provide the journal entry to recognize tax expense. Assume taxes are paid immediately (with cash). Note: the statutory rate is assumed to be 40%.
Assume the interest income is permanently non-taxable. You will have to decide whether there is any deferred tax position, given these facts.
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Income
Statement
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Tax Return
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Difference: Permanent
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Revenues
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400
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400
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Cost of Goods Sold
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- 150
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- 150
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SG&A Expense
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- 50
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- 50
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Depreciation Expense
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- 20
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- 20
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Interest Income
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20
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0
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20
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Pre-Tax Income
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200
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Taxable Income
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180
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Statutory Rate
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40%
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40%
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Tax Expense
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?
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Taxes Paid (Cash)
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?
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Deferred Tax?
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?
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Tax Expense:
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Assets
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Liabilities
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Owners' Equity
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Debit Credit $ $
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