South Carolina Corporation has one temporary difference at t

South Carolina Corporation has one temporary difference at the end of 2017 that will reverse and cause taxable amounts for the next three years. The respective reversal amounts follow 018 019 2020 Part 1: One Temporary Difference, Future Taxable Amounts, One Rate, Beginning Deferred Taxes Other information concerning the company\'s finangial information follows 327,76600 South Carolina\'s pretax financial income for 2017 Tax rate for all years 27% There are no deferred taxes at the beginning of 2017 Instructions (a) Compute taxable income and income taxes payable for 2017 (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017 Future Years 2018 2019 2020 Total Debit Prepare the income tax expense section of the income statement for 2017, beginning with the line Tncome (C) before income taxes

Solution

(a) Compute taxable income and income taxes payable for 2017 Amount in $ Pretax financial income for 2017 327766 Temporary difference resulting in future taxable amounts in 2018 15000 2019 87000 2020 21000 -123000 Taxable income for 2017 204766 tax rate 27% Income tax payable for the year 2017 (204766*0.27) 55287 (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017 Future years 2018 2019 2020 Total Future taxable (deductible) amounts 15000 87000 21000 123000 Tax rate 27% 27% 27% Deffer tax Liability /(Asset) 4050 23490 5670 33210 Deffer tax Liability at the end of the year 2017 33210 Deffer tax Liability at the beginning of the year 2018 0 Deffer tax expense for 2017 33210 Current tax Expense 2017 55287 Income tax expense for 2017 88497 Journal Entry Debit Credit Income tax expense 88497             To income tax Payable 55287              To Deffer tax Liabliity 33210 (being income tax Expense has been recorded) © Prepare the income tax expense section of the income statement for 2017, beginning with the line \"Income before income taxes Income before income taxes 327766 Income tax expenses              Current Tax 55287              Deffer tax 33210 88497 Net Income 239269