continuation for work JAIN

1.

Deferred tax liability, January 1, 2012, $53,280.

2.

Deferred tax asset, January 1, 2012, $0.

3.

Taxable income for 2012, $153,180.

4.

Pretax financial income for 2012, $222,000.

5.

Cumulative temporary difference at December 31, 2012, giving rise to future taxable amounts, $293,040.

6.

Cumulative temporary difference at December 31, 2012, giving rise to future deductible amounts, $46,620.

7.

Tax rate for all years, 30%.

8.

The company is expected to operate profitably in the future.

(a)

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Income taxes payable

$

Taxable income

$153,180

Enacted tax rate

30

%

Income taxes payable

$45,954

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(b)

Account Titles and Explanation

Debit

Credit

Deferred Tax

Temporary Difference

Future Taxable (Deductible) Amounts

Tax Rate

(Asset)

Liability

First one

$293,040

30

%

$87,912

Second one

(46,620

)

30

%

$(13,986

)

Totals

$246,420

$(13,986

)

$87,912

Deferred tax liability at the end of 2012

$87,912

Deferred tax liability at the beginning of 2012

53,280

Deferred tax expense for 2012 (increase required in deferred tax liability)

$34,632

Deferred tax asset at the end of 2012

$13,986

Deferred tax asset at the beginning of 2012

0

Deferred tax benefit for 2012 (increase required in deferred tax asset)

$ (13,986

)

Deferred tax expense for 2012

$34,632

Deferred tax benefit for 2012

(13,986

)

Net deferred tax benefit for 2012

20,646

Current tax expense for 2012 (Income taxes payable)

45,954

Income tax expense for 2012

$66,600