Bandung Corporation began 2017 with a \(92,000 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to \)350,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is \(525,000, the tax rate for all years is 40%, and taxable income for 2017 is \)405,000. Instructions (a) Compute income taxes payable for 2017. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (c) Prepare the income tax expense section of the income statement for 2017 beginning with the line “Income before income taxes.”

Particulars

Amount

Taxable income for the year 2017

$405,000

Multiply: Tax rate

40%

Income tax payable for 2017

$162,000

Particulars

2018

2019

Total

Taxable income

$175,000

$175,000

$350,000

Multiply: Tax rate

40%

40%

Deferred tax liability

$70,000

$70,000

$140,000

Particulars

Amount

Deferred tax liability at the end

$140,000

Less: Deferred tax liability at the beginning

$92,000

Deferred tax expense for 2017

$48,000

Add: Current tax expense for 2017

$162,000

Income tax expense for 2017

$210,000

Date

Particulars

Debit

Credit

2017

Income tax expense

$210,000

Income tax payable

$162,000

Deferred tax liability

$48,000

(To record the income tax expense)

Particulars

Amount

Income before income tax

$525,000

Less: Income tax expense

Current tax expense

$162,000

Deferred tax expense

$48,000

$210,000

Net Income

$315,000