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Calculate the deferred tax liability for the year

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Question - Grace Corporation's pretax financial income is $600,000 and taxable income is $550,000 for year 2020. Its beginning deferred tax liability account has a balance of $75,000. Its cumulative temporary differences for year-end 2020 is equal to $300,000 and will reverse and result in taxable amounts as follows:

Year Taxable Amount

2021 $100,000

2022 $ 75,000

2023 $125,000

The tax rate is 30% for all years.

Required -

(i) Calculate the taxes payable for the year 2020.

(ii) Calculate the deferred tax liability for the year 2020.

(iii) Calculate the total tax expense for 2020.

(iv) Prepare the journal entry to record the tax expense for 2020.

(v) Prepare the income statement presentation of the tax amounts.

Reference no: EM133118261

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