Question
Zurich Company reports pretax financial income of $70,000 for 2017. The following item causes taxable income to be different than pretax financial income: Q10 10PTS Rent revenue on the tax return…
Zurich Company reports pretax financial income of $70,000 for 2017. The following item causes taxable income to be different than pretax financial income: Q10 10PTS Rent revenue on the tax return is greater than rent revenue recognized on the income statement by $22,000. Zurich's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2017 Required: Prepare Z Company's journal entry to record 2017 taxes.
Solutions
Expert Solution
tax as per book profit = 70000*30%
income tax expense=21000$
profit for tax purpose = 70000+ 22000 rent revenue
Tax payable = 92000*30%
=27600$
deferred tax asset due to excess rent revenue = 27600-21000
=6600
journal
income tax expense 21000
deferred tax asset 6600
income tax
payable
27600