Reference no: EM132968585

James Weston, your finance professor, thinks he is a cowboy and wears boots all the time (oddly enough, usually with a Hawaiian shirt). Last year he started a new company called Weston Western Wear Inc., or WWW for short. This year WWW purchased a boot making machine for $30,000, which has a three-year useful life and the company will depreciate it on a straight line basis. For tax purposes assume Weston Western Wear gets the full deduction the first year. Also assume Western Wear makes $100,000 in pretax financial reporting income before depreciation expense over the next three years and the statutory tax rate is 20%.

Problem 1: What is the amount of the deferred tax included on the balance sheet at the end of year 3? Answer using just numbers (e.g., 10000). Record deferred tax assets as positive and deferred tax liabilities as negative numbers.

Problem 2: What is the amount of the deferred tax included on the balance sheet at the end of year 1? Answer using just numbers (e.g., 10000). Record deferred tax assets as positive and deferred tax liabilities as negative numbers.

Problem 3: How much is the deferred portion of income tax expense in year 2? Answer using just numbers (e.g., 10000). Record debits to deferred taxes as positive and credits to deferred taxes as negative numbers.

Problem 4: How much is the current portion of income tax expense in year 2? Answer using just numbers (e.g., 10000).

Problem 5: How much is the deferred portion of income tax expense in year 1? Answer using just numbers (e.g., 10000). Record debits to deferred taxes as positive and credits to deferred taxes as negative numbers.

Problem 6: How much is the current portion of income tax expense in year 1? Answer using just numbers (e.g., 10000).

Problem 7: How much would WWW report as income tax expense on the financial statements in year 1? Answer using just numbers (e.g., 10000).