During 2012, the Martell Heights Corp. income statement reported income of $500,000 before tax. The companys income

Question:

During 2012, the Martell Heights Corp. income statement reported income of $500,000 before tax. The company’s income tax return filed with the IRS showed taxable income of $440,000. During 2012, Martell Heights was subject to an income tax rate of 40%.

Requirements
1. Journalize Martell Heights’ income taxes for 2012.
2. How much income tax did Martell Heights have to pay for the year 2012?
3. At the beginning of 2012, Martell Heights’ balance of Deferred Tax Liability was $32,000. How much Deferred Tax Liability did Martell Heights report on its at December 31, 2012?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...