John Company began in 1/1 2014. At the end of the first year of operations, John reported 440,000 incomes on its income statements before taxes and 300,000 taxable income on its tax return. Analysis of the difference revealed a 84,000 permanent difference and a 54,000 temporary difference. This tax rate for 2014 and beyond is 35%.
Prepare the JE to record the income taxes in 2014.
Assume at the end of 2015, the accumulated tax liability difference related to future years was 84,000. Prepare the JE to record any adjustment to deferred tax liability at the end of 2015.