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


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