E19-21B (Two Temporary Differences, Multiple Rates, Future Taxable Income)Jones Clothier Inc. has two temporary differences at the end of 2014. The first difference stems from installment sales, and the second one results from the accrual for costs associ

E19-21B (Two Temporary Differences, Multiple Rates, Future Taxable Income)Jones Clothier Inc. has two temporary differences at the end of 2014. The first difference stems from installment sales, and the second one results from the accrual for costs associated with closing a factory. Jones’s assistant controller developed a schedule of future taxable and deductible amounts related to these temporary differences as follows.

                                                2015                       2016                       2017                  2018  

Taxable amounts              $ 80,000                $80,000                $60,000              $40,000

Deductible amounts        (150,000)               (60,000)                                                            

                                           $ (70,000)               $20,000                 $60,000               $40,000

As of the beginning of 2014, the enacted tax rate is 40% for 2014 through 2016, and 30% for 2017 through 2019. At the beginning of 2014, the company had no deferred income taxes on its balance sheet. Taxable income for 2014 is $150,000. Taxable income is expected in all future years.

Instructions

(a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014.

(b) Indicate how deferred income taxes would be classified on the balance sheet at the end of 2014.