Q1

Beg bal 9,000

cumulative temp diff (70,000 * .30) = 21,000

total expense for the year         &n bsp;       30,000

Q2

Income before dep exp = $100,000

Dep exp         &nb sp;         &nb sp;      $20,000

Taxable income                $80,000

Current tax liability = $80,000 * .30 = $24,000

Q3

Installment sale = 2,600 * .25 = 650

Bad debt 1,400 * .25 = <350>

                                   300

Q2-

The key point in this question is how to come up with current income tax liability. We have to first calculate taxable income for 1991. Never use book income to calculate current income tax.

Q3- first have to know bad debt expense is future deductible amount!

And installment sales is future taxable amount.

Bad debt expense is future deductible amount- $1400 X future tax rate 25% = Deferred tax asset- $350

JE-

Dr: Deferred tax asset $350

     Cr: Deferred income tax Exp  $350

Installment sales is future taxable amount- $2600 X future tax rate $25% = $650

JE

Dr: Deferred income tax exp $650

     Cr: Defer tax liability $650

And if you combine these two JEs-

Dr:Deferred tax asset         350

Dr:Deferred income tax exp  300

    Cr: Deferred tax liability        &nb sp;  650