Question - Culver Company has the following two temporary differences between its income tax expense and income taxes payable.
|
2017
|
2018
|
2019
|
|
Pretax financial income
|
$849,000
|
$883,000
|
$961,000
|
|
Excess depreciation expense on tax return
|
(30,800)
|
(38,900)
|
(10,300)
|
|
Excess warranty expense in financial income
|
21,000
|
9,600
|
8,000
|
|
Taxable income
|
$839,200
|
$853,700
|
$958,700
|
The income tax rate for all years is 40%.
(a) Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019.
(b) Indicate how deferred taxes will be reported on the 2019 balance sheet. Culver's product warranty is for 12 months.