Matadors Corp. computed pretax financial income of $50,000 for the first year of
ID: 2550603 • Letter: M
Question
Matadors Corp. computed pretax financial income of $50,000 for the first year of its operations ended December 31, 2015. Unearned rent revenue of $60,000 had been recognized as taxable income in 2015 when the cash was received but had not yet been recognized in the financial accounting records. The unearned rent is expected to be recognized on the books in the following pattern.
Year
Amount
2016
$10,000
2017
15,000
2018
15,000
2019
20,000
The enacted income tax rate is 30% for 2015 and all future years. Prepare the journal entries necessary to record income taxes for 2015. Assume that there will be sufficient income in each future year to realize any deductible amounts.
Year
Amount
2016
$10,000
2017
15,000
2018
15,000
2019
20,000
Explanation / Answer
To record income taxes for the year 2015
Income taxes expense Dr -(50000x30%) 15, 000
Deferred Taxes Asset Dr - (60,000x30%)- 18,000
Income taxes payable Cr - 33,000