At the end of 2013, Lucretia McEvil Company has $189,740 of cumulative temporary differences that will result in reporting future taxable amounts as follows.
|
2014
|
|
$61,440
|
|
2015
|
|
55,900
|
|
2016
|
|
48,500
|
|
2017
|
|
23,900
|
|
|
$189,740
|
Tax rates enacted as of the beginning of 2012 are:
|
2012 and 2013
|
|
40
|
%
|
|
2014 and 2015
|
|
30
|
%
|
|
2016 and later
|
|
25
|
%
|
McEvil's taxable income for 2013 is $342,820. Taxable income is expected in all future years.
(a) Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2013, assuming that there were no deferred taxes at the end of 2012.
(b) Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2013, assuming that there was a balance of $39,750 in a Deferred Tax Liability account at the end of 2012.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)