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Chapter 19: Question 8BE (page 1094)

Mitchell Corporation had income before income taxes of \(195,000 in 2017. Mitchell鈥檚 current income tax expense is \)48,000, and deferred income tax expense is $30,000. Prepare Mitchell鈥檚 2017 income statement, beginning with Income before income taxes.

Short Answer

Expert verified

Theincome statementrecords theincome tax expenseof the firm that is incurred for theprevious financial year. The amount oftotal income tax expenseisdeductedfrom thefirm's total incometo calculate thenet income or loss.

Step by step solution

01

Given the amounts as

Particulars

Amount

Income before income tax for 2017

$195,000

Current income tax

$48,000

Deferred income tax expense

$30,000

02

Preparation of the income statement for 2017

Mitchell Corporation
Income Statement

Particulars

Amount

Income before income taxes

$195,000

Income tax expense

Current income tax

$48,000

Add: Deferred income tax

$30,000

Total income tax expense

$78,000

Net income/loss

$117,000

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Most popular questions from this chapter

Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2017. 1. Mooney Co. has developed the following schedule of future taxable and deductible amounts. 2018 2019 2020 2021 2022 Taxable amounts \(300 \)300 \(300 \) 300 \(300 Deductible amount 鈥� 鈥� 鈥� (1,600) 鈥� 2. Roesch Co. has the following schedule of future taxable and deductible amounts. 2018 2019 2020 2021 Taxable amounts \)300 \(300 \) 300 \(300 Deductible amount 鈥� 鈥� (2,300) 鈥� Both Mooney Co. and Roesch Co. have taxable income of \)4,000 in 2017 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2017 are 30% for 2017鈥�2020 and 35% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities. Instructions For each of these two situations, compute the net amount of deferred income taxes to be reported at the end of 2017, and indicate how it should be classified on the balance sheet.

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Roth Inc. has a deferred tax liability of \(68,000 at the beginning of 2018. At the end of 2018, it reports accounts receivable on the books at \)90,000 and the tax basis at zero (its only temporary difference). If the enacted tax rate is 34% for all periods, and income taxes payable for the period is $230,000, determine the amount of total income tax expense to report for 2018.

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South Carolina Corporation has one temporary difference at the end of 2017 that will reverse and cause taxable amounts of \(55,000 in 2018, \)60,000 in 2019, and \(65,000 in 2020. South Carolina鈥檚 pretax financial income for 2017 is \)300,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2017. Instructions (a) Compute taxable income and income taxes payable for 2017. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (c) Prepare the income tax expense section of the income statement for 2017, beginning with the line 鈥淚ncome before income taxes.鈥�
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