Haynes Publications Inc. reported pretax accounting income of $130,000 for its 2014 fiscal year. IFRS revenue recognition criteria prohibited the recognition of revenue associated with $10,000 in cash received during 2014, but tax rules require Haynes to pay tax on this amount in 2014. In addition, depreciation for tax purposes (capital cost allowance) exceeds accounting depreciation by $20,000 for 2014. Haynes pays tax at a rate of 33%.
Requirements
1. Compute Haynes' taxable income for 2014.
2. Journalize the corporation's income taxes for 2014.