Deferred Tax Assets and Liabilities
Energizer Manufacturing Corporation reports taxable income of $829,000 on its income tax return for the year ended December 31, 2008, its first year of operations. Temporary differences between financial income and taxable income for the year are as follows:
|
Tax depreciation in excess of book depreciation |
$ 80,000 |
|
Accrual for product liability claims in excess of actual claims (estimated |
|
|
product claims payable is a current liability) |
125,000 |
|
Reported installment sales income in excess of taxable installment sales |
|
|
income (installments receivable is a current asset) |
265,000 |
The enacted income tax rate is 40% for 2008 and all future years. Prepare the journal entries necessary to record income taxes for 2008.