Accounting Question?

Question:

These are ALL accounts for a company: Cash, Inventory, Accounts Receivable, Accounts Payable, Income Tax Payable, Loans, Capital Stock and Retained Earnings.

How would you create a journal entry with dr = cr with this transaction:
The company paid $ 5000 for 2004 and provisional 2005 income taxes. The Income tax on the 2006 net income is estimated to be $2000. (Income tax payable at Dec. 31 2004 = $1500)

Answer:
Please contact your Auditor

Journal Entry 2004:
Dr. Deferred Tax Asset - $5000
Cr. Cash - $5000

Dr. Income Tax payable - $1500
Cr. Deferred Tax Asset - $1500

2004 Balance Sheet amount - $3500

Journal Entry 2005:
Entry in General Journal:
The company approves a provision for taxes in the amount of ________.

2005 Balance Sheet amount - $3500

Journal Entry 2006:
Income Tax Expense-$2000
Accrued Income Tax Payable - $2000

When paid:
Accrued Income Tax Payable - $2000
Deferred Income Tax - $2000

2006 Balance Sheet amount - $1500

Accounting Question?

Hot Topic