continuation for work JAIN

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The following facts relate to Alschuler Corporation.

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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Compute income taxes payable for 2012.

Income taxes payable	$
Taxable income	$153,180
Enacted tax rate	30	%
Income taxes payable	$45,954

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(b)

Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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

*Because of a flat tax rate, these totals can be reconciled: $246,420 x 30% = $(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

45954