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Prepare the appropriate journal entry for Pocus

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Reference no: EM132605939

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Q1) In the current year, Bruno Corporation collected rent of $3,700,000. For income tax reporting, the rent is taxed when collected. For financial reporting, the rent is recognized as income in the period earned. At the end of the current year, the unearned portion of the rent collected in the current year amounted to $420,000. Bruno had no temporary differences at the beginning of the current year. Assume an income tax rate of 25%.

Required - The current year's income tax liability from the tax return is $820,000. Prepare the journal entry to record income taxes for the year.

Q2) Pocus, Inc., reports warranty expense when related products are sold. For tax purposes, the warranty costs are deductible as incurred. At the end of the current year, Pocus has a warranty liability of $185,000 and taxable income of $17,000,000. At the end of the previous year, Pocus reported a deferred tax asset of $77,000 related to the difference in reporting warranty expense, its only temporary difference. The enacted tax rate is 25% each year.

Required - Prepare the appropriate journal entry for Pocus to record the income tax provision for the current year.

Reference no: EM132605939

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