The information that follows pertains to Raymond Company. Temporary differences for the year 2006 are summarized below.
Expenses deducted on the tax return, but not included on the income statement:
Depreciation $60,000
Prepaid expense 8,000
Expenses reported on the income statement, but not deducted on the tax return:
Warranty expense 9,000
- No temporary differences existed at the beginning of 2006.
- Taxable income was $8,000 for 2006.
- Income statement for the year included $6,000 interest on municipal bonds.
- The tax rate is 30%.
Required:
Prepare the journal entry to record the tax provision for 2006. Provide supporting computations.