A companys income statement reported net income of 80000 dur

A company\'s income statement reported net income of $80,000 during 2016. The income tax retum excluded a revenue item of $10,000 (reported on the income statement) because under the tax laws the $10,000 would not be reported for tax purposes until 2017. 1. Required: Prepare the journal entry to record the 2016 income tax expense assuming a 40% tax rate.

Solution

Income tax expense 32000 =80000*40%       Income tax payable 28000       Deferred tax liability 4000 =10000*40% To record income tax expense