Question

In the current year, Bruno Corporation collected rent of $3,750,000. For income tax reporting, the rent is taxed when collected. For financial reporting, the rent is recognized as income in the period earned. At the end of the current year, the unearned portion of the rent collected in the current year amounted to $430,000. Bruno had no temporary differences at the beginning of the current year. Assume an income tax rate of 25%.

Required:
The current year's income tax liability from the tax return is $830,000. Prepare the journal entry to record income taxes for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

	Debit	Credit
Income tax expense	722500
Deferred tax asset	107500		=430000*25%
Income tax payable		830000
To record income taxes for the year