Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year.Assume a 34% corporate tax rate and no valuation allowance.
Assets Cash Accounts Receivable Buildings Accumulated Depreciation Furniture & Fixtures Accumulated Depreciation Total Assets Liabilities Accrued Vacation Pay Note Payable Total Liabilities Paid in Capital Retained Earnings Total Liabilities and Stockholders’ Equity Tax Debit/(Credit) $1,20020,0001,200,000(600,000)160,000(84,000)$697,200$−0−(464,000)($464,000)($4,000)(229,200)($697,200)Book Debit/(Credit) $1,20020,0001,200,000(320,000)160,000(60,000)$1,001,200($108,000)(464,000)($572,000)($4,000)(425,200)($1,001,200)
Amelia, Inc.’s, gross deferred tax assets and liabilities at the beginning of Amelia’s year are listed below. Accrued Vacation Pay Subtotal Applicable Tax Rate Gross Deferred Tax Asset Building -Accumulated DepreciationFurniture & fixtures -Accumulated DepreciationSubtotalApplicable tax rate Gross deferred tax liability Beginning of Year $84,000$84,000×34%$28,560($244,000)(12,800)($256,800)×34%($87,312) Amelia, Inc.’s, book income before tax is $25,200. Amelia records two permanent book-tax differences. It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and entertainment expense. Provide the journal entry to record Amelia’s current tax expense.
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Income Tax Expense ....
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