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Loran's pretax accounting income in 20X1 is $100,000. Loran had bad debt expense for financial reporting purposes of $14,000 in 20X1. In 20X1, Loran deducted $4,000 in bad debts. Loran expects the timing
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43 votes
43 votes
Loran's pretax accounting income in 20X1 is $100,000. Loran had bad debt expense for financial reporting purposes of $14,000 in 20X1. In 20X1, Loran deducted $4,000 in bad debts. Loran expects the timing difference to reverse $3,000 in 20X2 and $7,000 in 20X3. The income tax rate is 40%. Which of the following entries would be included for the deferred tax entry required at the end of 20X2?

User Changeling
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1 Answer

16 votes
16 votes

Answer:

The answer is "2800".

Step-by-step explanation:

The positive temporary difference at 20X2 end
= 7000

X Tax rate on revenue
=40\%

At the end of 20X2 deferred account of tax assets=
2800

User Ruslan Mansurov
by
2.9k points
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