A. Cooper 1

Aleshia Cooper

Thursday, 25 February, 2014

Accounts 305 -01

Mr. Terrance Richards

Homework Questions: E: 19-12, 19-22

Exercise: 19-12

Temporary Difference

Future Taxable (Deductible) Amounts

Tax RateDeferred Tax

(Asset) Liability

First one ($230,000 40% $92,000Second one ( (95,000) 40% $(38,000)

Totals $135,000 $(38,000) $92,0000

ACCOUNT Debit Credit

Taxable income for 2014 $405,000

Enacted tax rate 40%

Income tax payable for 2014 $162,000

Part BIncome Tax Expense 56,000

Deferred Tax Asset 18,000

Income Taxes Payable 42,000

Deferred Tax Liability 32,000

A. Cooper 2

Deferred tax liability at the end of 2014 $140,000

Deferred tax liability at the beginning of 2014

92,000

Deferred tax expense for 2014 (increase required in deferred tax liability) 48,000 Current tax expense for 2014 162,000

Income tax expense for 2014 $210,000

Exercise: 19-22

A. Cooper 3

ACCOUNT Debit Credit

Income Tax Expense 125,800Deferred Tax Asset 10,200

Income Taxes Payable 119,000

Deferred Tax Liability 17,000

ACCOUNT Debit Credit

Taxable income for 2014 $350,000Enacted tax rate 34%

Income tax payable for 2014 $119,000

Temporary Difference Future Taxable (Deductible) Amounts

Tax Rate

Deferred Tax(Asset) Liability

Accounts receivable $50,000 34% *$17,000Litigation liability ( (30,000) 34% $(10,200)

Totals ($20,000 $(10,200) $17,000

ACCOUNT Debit Credit

Deferred tax liability at the end of 2014 $17,000Deferred tax liability at the beginning of 2014

0

Deferred tax expense for 2014 (increase required in deferred tax liability)

$17,000

ACCOUNT Debit Credit

Deferred tax liability at the end of 2014 $10,200Deferred tax liability at the beginning of 2014

0

Deferred tax expense for 2014 (increase required in deferred tax liability)

$10,200

A. Cooper 4

ACCOUNT Debit Credit

Deferred tax liability at the end of 2014 $140,000

Deferred tax liability at the beginning of 2014

92,000

Deferred tax expense for 2014 (increase required in deferred tax liability) 48,000 Current tax expense for 2014 162,000

Income tax expense for 2014 $210,000

(b) Temporary Difference

Resulting Deferred Tax Related Balance Sheet Account Classification(Asset) Liability

Accounts receivable $17,000 Accounts Receivable CurrentLitigation liability $(10,200) _______ Lawsuit Obligation Current

Totals $(10,200) $17,000