Prepare the journal entries to record income taxes

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Reference no: EM13849802

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2013 through 2016 except for differences in depreciation on an operational asset. The asset cost $110,000 and is depreciated for income tax purposes in the following amounts:

2013

$

36,300

2014


48,400

2015


16,500

2016


8,800

The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.

Income amounts before depreciation expense and income taxes for each of the four years were as follows.


2013

2014

2015

2016

Accounting income before taxes and depreciation

$ 70,000

$ 90,000

$ 80,000

$ 80,000

Assume the average and marginal income tax rate for 2013 and 2014 was 30%; however, during 2014 tax legislation was passed to raise the tax rate to 40% beginning in 2015. The 40% rate remained in effect through the years 2015 and 2016. Both the accounting and income tax periods end December 31.

Required:

Prepare the journal entries to record income taxes for the years 2013 through 2016.

Reference no: EM13849802

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