ACC 423 Week 5 Final Exam 2 Chapter-19

Brief Exercise 19-3

Marigold Corporation began operations in 2017 and reported pretax financial income of

$212,000

for the year. Marigold’s tax depreciation exceeded its book depreciation by

$33,000

. Marigold’s tax rate for 2017 and years thereafter is

30%

. Assume this is the only difference between Marigold’s pretax financial income and taxable income.

Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable

Brief Exercise 19-12

Blossom Corporation had the following tax information.

Year

Tax Inc.

Tax rate

Taxes Paid

2015

$306,000

34%

$104,040

2016

$324,000

29%

$93,960

2017

$393,000

29%

$113,970

In 2018, Blossom suffered a net operating loss of

$488,000

, which it elected to carry back. The 2018 enacted tax rate is

28%

Prepare Blossom’s entry to record the effect of the loss carryback.

Exercise 19-2

The following information is available for Pronghorn Corporation for 2016 (its first year of operations).

1. Excess of tax depreciation over book depreciation,

$38,000

This

$38,000

difference will reverse equally over the years 2017–2020.

2. Deferral, for book purposes, of

$19,800

of rent received in advance. The rent will be recognized in 2017.

3. Pretax financial income,

$276,800

4. Tax rate for all years,

30%