Differences between financial income and taxable income

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Reference no: EM13538424

Energizer Manufacturing Corporation reports taxable income of $829,000 on its income tax return for the year ended December 31, 2008, its first year of operations. Temporary differences between financial income and taxable income for the year are as follows:

Tax depreciation in excess of book depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,000

Accrual for product liability claims in excess of actual claims (estimated product claims payable is a current liability) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000

Reported installment sales income in excess of taxable installment sales income (installments receivable is a current asset) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,000

The enacted income tax rate is 40% for 2008 and all future years. Prepare the journal entries necessary to record income taxes for 2008.

Reference no: EM13538424

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