Problem 191 The following information is available for Metlo

Problem 19-1 The following information is available for Metlock Corporation for 2017. 1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $120,000. This difference will reverse in equal amounts of $30,000 over the years 2018-2021. 2. Interest received on municipal bonds was $10,800. 3. Rent collected in advance on January 1, 2017, totaled $65,400 for a 3-year period. Of this amount, $43,600 was reported as unearned at December 31, 2017, for book purposes. 4. The tax rates are 40% for 2017 and 35% for 2018 and subsequent years. 5. Income taxes of $328,000 are due per the tax return for 2017. 6. No deferred taxes existed at the beginning of 2017. Compute taxable income for 2017 Taxable income for 2017 Compute pretax financial income for 2017. Pretax financial income for 2017 Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2017 and 2018. Assume taxable income was $902,000 in 2018. (Credit account titles are automatically indented whern amount is entered. Do not indent manually. If no entry is required, select \"No Entry for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 2017 2018

Solution

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Excess depreciation	$        120,000
Tax Rate	35%
Deferred Tax Liability	$          42,000