ACC 326 Homework Problem #3 – Fall 2016
Deferred Taxes
DUE DATE: Tuesday, September 27, at the beginning of class.
Name:

Section: 11:00 12:30 3:30

UT EID:

Following is information concerning the difference between Guilbert Corporation’s taxable income and its GAAP
income.
Taxable income
Excess of revenues over expenses
(excluding the following two items)
Installment sales profits collected
Expenditures for warranties
Taxable income

2014
$640,000

Pretax financial income
Excess of revenues over expenses
(excluding the following two items)
Installment sales profits collected
Expenditures for warranties
Income before taxes

2014
$640,000

28,000
(20,000)
$648,000

84,000
(60,000)
$664,000

2015
$840,000
28,000
(20,000)
$848,000

2016
$360,000
28,000
(20,000)
$368,000

2015
$840,000

2016
$360,000

-0-0$840,000

-0-0$360,000

The tax rates in effect are: 2014, 40%; 2015 and 2016, 45%. The rates were enacted into law on January 1, 2014.
No deferred taxes existed at the beginning of 2014.

Required
(a) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for
2014.

(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for
2015.

(c) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for
2016.