Accounting for Income Taxes:
Q1. Roberts Corp. reports pretax accounting income of $200,000, but due to a single temporary difference, taxable income is only $150,000. At the beginning of the year, no temporary differences existed. Roberts is subject to a tax rate of 40%.
Required:
Prepare the compound journal entry to record Roberts Corp.'s income taxes. Show well labeled computations.
Q2. EZ, Inc., reports pretax accounting income of $400,000, but due to a single temporary difference, taxable income is $500,000. At the beginning of the year, no temporary differences existed. EZ is subject to a tax rate of 40%.
Required: Prepare the appropriate journal entry to record EZ's income taxes. Show well-labeled computations.