The following journal entry summarizes for the current year the income tax expense of Wilson’s
Software Warehouse:
Income Tax Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 960,000
Income Tax Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340,000
Deferred Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
To record income tax expense for the current year.
Of the deferred income taxes, only $30,000 is classified as a current liability.
a. Define the term deferred income tax.
b. What is the amount of income tax that the company has paid or expects to pay in conjunction with its income tax return for the current year?
c. Illustrate the allocation of the liabilities shown in the above journal entry between the classifications of current liabilities and long-term liabilities.