Share
Explore BrainMass

Nepomuzeno, Inc. Temporary Permanent Differences, Deferred

1. The records of Nepomuzeno, Inc. provided the following information
2012 2013 2014 2015
Pretax income 90,000 92,000 95,000 98,000
Taxable income 63,000 101,000 104,000 107,000

Income Tax rate 30% for all years
The above amounts include only two temporary differences;
a. Installment sales for accounting purposes in 2012, $30,000 included in tax return, $10,000 each year from 2013 to 2015
b. Cost of warranties for accounting purposes, $4,000 in 2012, deducted for income tax $1,000 each year from 2012 to 2015
Required
1. Prepare schedule to reconcile accounting and taxable income and to compute taxes payable
2. Prepare a schedule of temporary differences and deferred income taxes
3. Prepare Journal entry for each year
4. Show how income tax expenses, deferred income tax asset or liability and income taxes payable should be reported on the financial statements for each year

Solution Preview

Your tutorial creates a reconciliation between financial income and taxes payable, ...

Solution Summary

Your tutorial creates a reconciliation between financial income and taxes payable, shows the journal entry in each year and shows the presentation on the face of the income statement. Tutorial is in Excel (attached). Click in cells to see computation.

$2.19