Question

rangee rover inc. had taxable income of $199,500 for the year. the gaap basis of accounts receivable (net) is $12,600 less than the tax basis of accounts receivable. assuming a tax rate of 25%, record the income tax journal entry on december 31. assume zero beginning balances in deferred tax accounts.

Answer 1

To record the income tax journal entry on December 31, you need to debit income tax expense for $49,875, credit deferred tax liability for $12,600, and credit income tax payable for $37,275.

Step-by-step explanation:

A journal is a personal or professional record of events, thoughts, or reflections, often organized by date. It serves as a tool for recording experiences, tracking progress, or expressing emotions. Journals can take various forms, including written or digital formats. The income tax journal entry on December 31 can be recorded as follows:

Debit: Income Tax Expense for $49,875 (taxable income of $199,500 multiplied by the tax rate of 25%),Credit: Deferred Tax Liability for $12,600 (difference between GAAP basis and tax basis of accounts receivable),Credit: Income Tax Payable for $37,275 (difference between income tax expense and deferred tax liability).