Temporary permanent differences-deferred

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1. The records of Nepomuzeno, Inc. provided the following information

2012 2013 2014 2015

Pretax income 90,000 92,000 95,000 98,000

Taxable income 63,000 101,000 104,000 107,000

Income Tax rate 30% for all years

The above amounts include only two temporary differences;

a. Installment sales for accounting purposes in 2012, $30,000 included in tax return, $10,000 each year from 2013 to 2015

b. Cost of warranties for accounting purposes, $4,000 in 2012, deducted for income tax $1,000 each year from 2012 to 2015


1. Prepare schedule to reconcile accounting and taxable income and to compute taxes payable

2. Prepare a schedule of temporary differences and deferred income taxes

3. Prepare Journal entry for each year

4. Show how income tax expenses, deferred income tax asset or liability and income taxes payable should be reported on the financial statements for each year

Reference no: EM1365064

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