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    Journal entry to record income taxes for Years 2 & 3

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    The accounting records of Longacre Nursery, Inc., for Year 2 and Year 3 reveal the following:

    Year 2 Year 3
    Income before income taxes per books $250,000 $400,000
    Timing differences (30,000) 20,000
    Permanent differences 5,000 (6,000)
    Taxable income $225,000 $414,000

    The income tax rate is 40 percent in each year.

    Required:

    a. Prepare the journal entry to record income taxes for Year 2.
    b. Prepare the journal entry to record income taxes for Year 3.

    © BrainMass Inc. brainmass.com October 9, 2019, 10:40 pm ad1c9bdddf
    https://brainmass.com/business/journal-entries/journal-entry-record-income-taxes-years-228286

    Solution Preview

    Year 2 Year 3
    Income before income taxes per books $250,000 $400,000
    Timing differences $(30,000) $20,000
    ...

    Solution Summary

    The expert prepares journal entries to record income taxes for years two and three.

    $2.19