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    Roberts Corp. Accounting for Income Taxes

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    Accounting for Income Taxes

    a. Roberts Corp. reports pretax accounting income of $200,000, but due to a single temporary difference, taxable income is only $150,000. At the beginning of the year, no temporary differences existed. Roberts is subject to a tax rate of 40%.

    Required:
    Prepare the compound journal entry to record Roberts Corp.'s income taxes. Show well labeled computations.

    b. EZ, Inc., reports pretax accounting income of $400,000, but due to a single temporary difference, taxable income is $500,000. At the beginning of the year, no temporary differences existed. EZ is subject to a tax rate of 40%.

    Required:
    Prepare the appropriate journal entry to record EZ's income taxes. Show well-labeled computations.

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    Solution Preview

    (a) Taxable income $200,000
    Taxable temporary differences $50,000 (200,000 - 150,000)

    The journal entry to record the income taxes is:
    Current ...

    Solution Summary

    The computations are shown for you.

    $2.19

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