The accounting records of longacre nursery inc. for year 2, Ask an Expert

Accounting

The accounting records of Longacre Nursery, Inc., for Year 2 and Year 3 reveal the following:

Year 2 Year 3

Income before income taxes per books $250,000 $400,000

Timing differences (30,000) 20,000

Permanent differences 5,000 (6,000)

Taxable income $225,000 $414,000

The income tax rate is 40 percent in each year.

Required:

a. Prepare the journal entry to record income taxes for Year 2.

b. Prepare the journal entry to record income taxes for Year 3.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9277597

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