Reference no: EM132842326

The followings facts relate to Mckane Corporation:

1. Deferred tax liability, January 1, 2017, $60,000.
2. Deferred tax asset, January 1, 2017, $20,000.
3. Taxable income for 2017, $115,000.
4. Cumulative temporary difference at December 31,2017, giving rise to future taxable amounts, $210,000.
5. Cumulative temporary difference at December 31,2017, giving rise to future deductible amounts, $95,000.

Instructions

Problem 1: Compute the amount of pretax financial income for 2017.

Problem 2: Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017.

Problem 3: Prepare the income tax expense section of the income statement for 2017, beginning with the line "Income before income taxes".