Exercise 19-12 The following facts relate to Duncan Corporation

Subject: Business    / Accounting
Question
Exercise 19-12
The following facts relate to Duncan Corporation.
1.
2.
3.
4. Deferred tax liability, January 1, 2014, $60,000.
Deferred tax asset, January 1, 2014, $20,000.
Taxable income for 2014, $105,000.
Cumulative temporary difference at December 31, 2014, giving rise to future taxable
amounts, $230,000.
5. Cumulative temporary difference at December 31, 2014, giving rise to future deductible
amounts, $95,000.
6. Tax rate for all years, 40%. No permanent differences exist.
7. The company is expected to operate profitably in the future.
Don’t show me this message again for the assignment Compute the amount of pretax financial income for 2014.
$
Pretax financial
income
Don’t show me this message again for the assignment Show List of Accounts
Link to Text Prepare the journal entry to record income tax expense, deferred income taxes, and income
taxes payable for 2014. (Credit account titles are automatically indented when amount
is entered. Do not indent manually.)
Account Titles and
Explanation Debit Credit Don’t show me this message again for the assignment Show List of Accounts
Link to Text Prepare the income tax expense section of the income statement for 2014, beginning with the
line “Income before income taxes.” (Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45).)
Duncan Corporation
Income Statement (Partial)
Year ended December 31, 2014
$ $ $ Don’t show me this message again for the assignment Show List of Accounts
Link to Text Compute the effective tax rate for 2014. (Round answer to 0 decimal places, e.g. 25%)
The effective tax
rate %