Prepare income tax expense section of income

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Reference no: EM13160019

1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $120,000. This difference will reverse in equal amounts of $30,000 over the years 2011-2014.
2. Interest received on municipal bonds was $10,000.
3. Rent collected in advance on January 1, 2010 totaled $60,000 for a 3 year period. Of this amount, $40,000 was reported as unearned at December 31, for book purposes.
4. Tax rates are 40% for 2010 and 35% for 2011 and subsequent years.
5. Income taxes of $320,000 are due per the tax return for 2010.
6. No deferred taxes existed at the beginning of 2010.

Instructions
(a) Compute taxable income for 2010
(b) Compute pretax financial income for 2010
(c) Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2010 and 2011,
(D) Prepare the income tax expense section of the income statements for 2010, beginning with "income before income expense."

Reference no: EM13160019

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