Willingham, Inc., an accrual basis C corporation, reports pretax book income of $1,600,000. At the beginning of the year, Willingham reported no deferred tax accounts on its balance sheet. At the end of the year, Willingham’s depreciable assets had a net book value of $15,000,000. It is subject to a 21% U.S. income tax rate in the current year and for the foreseeable future.
Willingham’s book-tax differences include the following. Compute the entity’s current and deferred Federal income tax expense for the year.
Below is what I have. Are you able to check my answer?
Amount
Tax rate
Current tax
Deferred tax
Book income
1,600,000
add - provision for bad debt
4,000,000
21%
-840000
less - tax depr excess of book
-3,000,000
21%
630000
less - book installment gain
-2,000,000
21%
420000
less - non-tax muni tax
-200,000
0%
0
Taxable Income
400,000
21%
84000
210000
Current tax
400,000
21%
84,000
add - deferred tax expense
1,000,000
21%
210,000
Total tax
294,000
21%
taxable income from bad debt
-4,000,000
less - book installment gain
2,000,000
less - tax depr excess of book
3,000,000
Deferred tax expense
1,000,000
Journal entries are:
Journal Entries
Account titles
Debit
Credit
Income tax expense
294,000
Income tax payable
84,000
Deferred tax liability
210,000
Thanks, Liz