Question

CALCULATUE SSAGE HY INAUCTOR FLE SCREEN PRINTA VERSSON t8ACK NEXT Sheridan Corporation has one temporary difference at the end of 2017 that will reverse and case taxabie anounts of $56,.900 in 2018, $2,400 n 2019, and $67,800 in 2020. Sheridan's pratax Enandial income for 2017 is $279,400, and the tax rate is 40% for all years. There are no deferred taxes at the beginning of 2017. Compute taxable iecome and income taxes payable for 2017 Taxable income $ Income taxes payable SHOW LISE oF ACCUUNIS UNK TO TEXT LINK 1O XT Prapare the journal entry to record income tax expense, deferred incone taxes, and inceme taes payabie for 2017 (Credt account ttles are automatically indeatod whea amount is ontered De et indeatr manually. f no entry is required, select "No Entry" for the account tles and enter o for the amouts.) Debit Credit Account Titles and Explanation

Answer 1

Company has future taxable amount which mean there is deferred tax liability.
Deferred tax liability arises when tax paid as per income tax is lower than tax as per financial income.
Lower income tax mean net income as per income tax is lower than financial income
Calculation of taxable income
Pretax financial income	$279,400
Temporary difference
2018	-$56,900
2019	-$62,400
2020	-$67,800
Taxable income	$92,300
Income taxes payable	$36,920	92300*40%
Journal entry to record income tax expense
Account titles and Explanation	Debit	Credit
Income tax expense	$111,760
Income taxes payable		$36,920
Deferred tax liability - Current		$22,760	56900*40%
Deferred tax liability - Non-current		$52,080	(62400+67800)*40%
Partial income statement is shown below
Sheridan corporation
Income statement (Partial)
For the year ended 2017
Income before income taxes		$279,400
Income tax expense
Current	$36,920
Deferred tax liability	$74,840
		$111,760
Net income		$167,640