question at the end of 2013 lucretia mcevil company has 197 430 ofcumulative tempora 4305415

question at the end of 2013 lucretia mcevil company has 197 430 ofcumulative tempora 4305415

Question

At the end of 2013, Lucretia McEvil Company has $197,430 ofcumulative temporary differences that will result in reportingfuture taxable amounts as follows.

2014

$67,520

2015

54,310

2016

49,000

2017

26,600

$197,430

Tax rates enacted as of the beginning of 2012 are:

2012 and 201340%

2014 and 201530%

2016 and later25%

McEvil’s taxable income for 2013 is $347,200. Taxable income isexpected in all future years.

(a) Prepare the journal entry for McEvil to recordincome taxes payable, deferred income taxes, and income tax expensefor 2013, assuming that there were no deferred taxes at the end of2012.

(b) Prepare the journal entry for McEvil torecord income taxes payable, deferred income taxes, and income taxexpense for 2013, assuming that there was a balance of $33,340 in aDeferred Tax Liability account at the end of 2012.

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