Prepare journal entry reflecting income tax expense

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Reference no: EM13822068

CLB Printing Company Inc. ended its year ending December 31, 2014 with net income of $300,000 before taxes. The company's financial statement depreciation expense was $225,000. Its tax depreciation (MACRS) is 250,000. The company paid a fine of 25,000 to the State of Maryland for dumping toxic ink in a nearby river. The 25,000 is included in net income before taxes. The company paid 10,000 for premiums on a key man life insurance policy. The $10,000 is also reflected in net income before taxes. The company recorded an unrealized gain of 20,000 in securities being held. The securities are part of the company's stock portfolio at year end.

1. Using a 40% tax rate, compute the company's tax liability for the year and also any deferred tax assets or liabilities includible on the company's financial statements.

2. Prepare the journal entry reflecting income tax expense and income tax liability.

Reference no: EM13822068

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