Question

Brief Exercise 19-09 Bridgeport Inc. had pretax financial income of $144,200 in 2020. Included in the computation of that amount is insurance expense of $3,800 which is not deductible for tax purposes. In addition, depreciation for tax purposes exceeds accounting depreciation by $9,300. Prepare Bridgeport’s journal entry to record 2020 taxes, assuming a tax rate of 25%. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question:

Answer 1

Dr Income Tax Expense 37,000

Cr Deferred Tax Liability 2325

Cr Income Tax Payable 34,675

Step-by-step explanation:

Bridgeport Inc Journal entry

Dr Income Tax Expense 37,000

Cr Deferred Tax Liability 2325

Cr Income Tax Payable 34,675

Income Taxes Payable = ($138,700 x 25%)

= $34,675

Deferred Tax Liability

= ($9,300 x 25%)

= $2,325

$144,200 + $3,800 – $9,300

= $138,700