Share
Explore BrainMass

Roberts Corp. Accounting for Income Taxes

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.

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