Problem: Wilson Corporation began operations in January 2008, and purchased a machine for $20,000. Wilson uses straight-line depreciation over a four-year period for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2008, 30% in 2009, and 20% in 2010. Pretax accounting income for 2008 was $150,000, which includes interest revenue of $20,000 from municipal bonds. The enacted tax rate is 30% for all years. There are no other differences between accounting and taxable income.
Required:
Prepare a journal entry to record income taxes for the year 2008. Show well-labeled computations for the amount of income tax payable and the change in the deferred tax account.