Recording a Temporary Difference

Required

a$.$ Record the income tax journal entry on December $31.$

$-$Note: If a line in a journal entry isn't required for the transaction, in the last line of the journal entry, select $"$N$/$A$"$ as the account name and leave the Dr$.$ and Cr$.$ answers blank $($zero$).$

b$.$ Assume that there was a January $1$ beginning balance of $$8,000$ in the deferred tax asset account.

How would your answer to part a change?

$-$Note: If a line in a journal entry isn't required for the transaction, in the last line of the journal entry, select $"$N$/$A$"$ as the account name and leave the Dr$.$ and Cr$.$ answers blank $($zero$).$On December $31,$ for GAAP purposes, Clubs Inc. reported a balance of $$80,000$ in a warranty liability for anticipated costs to satisfy future warranty claims. The tax basis for the warranty liability is zero. No claims were paid during the year. The increase to income tax payable on December $31$ is $$170,000,$ and the tax rate is $25\%.$ Assume no other differences between the tax basis and GAAP basis of assets and liabilities, or any beginning balances in deferred tax accounts.

Required

a$.$ Record the income tax journal entry on December $31.$

$$Note: If a line in a journal entry isn't required for the transaction, in the last line of the journal entry, select $"$N$/$A$"$ as the account name and leave the Dr$.$ and Cr$.$ answers blank $($zero$).$

Date Account Name Dr$.$ Cr$.$

Dec. $31$

Answer

Answer

Answer

Answer

To record income tax expense

b$.$ Assume that there was a January $1$ beginning balance of $$8,000$ in the deferred tax asset account.

How would your answer to part a change?

$$Note: If a line in a journal entry isn't required for the transaction, in the last line of the journal entry, select $"$N$/$A$"$ as the account name and leave the Dr$.$ and Cr$.$ answers blank $($zero$).$

Date Account Name Dr$.$ Cr$.$

Dec. $31$

Answer

Answer

Answer

Answer

To record income tax expense