E19-7B (Terminology, Relationships, Computations, Entries) Instructions Complete the following statements by filling in the blanks. (a) If a $150,000 balance in Deferred Tax Liability was computed by use of a 30% rate, the underlying cumulative temporary

E19-7B (Terminology, Relationships, Computations, Entries)

Instructions

Complete the following statements by filling in the blanks.

(a) If a $150,000 balance in Deferred Tax Liability was computed by use of a 30% rate, the underlying cumulative temporary difference amounts to $_______.

(b) An income statement that reports current tax benefit of $63,000 and deferred tax expense of $19,000 will report total income tax ________ of $________.

(c) If a taxable permanent difference originates in 2012, it will cause taxable income for 2012 to be ________ (less than, greater than) pretax financial income for 2012.

(d) If the income statement shows total income tax expense of $186,000 and deferred tax expenses of $45,000, the total taxes due on the tax return for the period are _______.

(e) If total tax expense is $225,000 and the current expense is $155,000, then the deferred tax _______ (expense, benefit) is $_______. 

(f) In a period in which a deductible temporary difference reverses, the reversal will cause taxable income to be _______ (less than, greater than) pretax financial income.

(g) An decrease in the Deferred Tax Assets account on the balance sheet is recorded by a _______ (debit, credit) to the Income Tax Expense account.

(h) If a corporation’s “Income tax payable” on the balance sheet totals $100,000, the company made estimated payments during the year totaling $40,000, and the tax rate is 40%, taxable income equals $________.

(i) A valuation account _______ the balance reported in the balance sheet for a deferred tax asset to the amount expected to be realized.

(j) Deferred taxes ________ (are, are not) recorded to account for temporary differences.