As of December 31, 2008, its first year in business, Khaleeq Company had taxable temporary differences totaling $60,000. Of this total, $20,000 relates to current items. Khaleeq also had deductible temporary differences totaling $17,000, $5,000 of which relates to current items. Pretax financial income for the year was $100,000. The enacted tax rate for 2008 and all future years is 40%.
Instructions:
1. Prepare the journal entries to record income taxes for 2008.
2. Repeat (1), but assume that all the taxable temporary differences are noncurrent and that all the deductible temporary differences are current.