E19-3B (One Temporary Difference, Future Taxable Amounts, One Rate, Beginning Deferred Taxes)At the beginning of 2014, Krypton Inc. reporting a deferred tax liability of $80,000. At the end of 2014, the related cumulative temporary difference amounts to $300,000, and it will reverse evenly over the next 4 years. Pretax accounting income for 2014 is $380,000, the tax rate for all years is 40%, and taxable income for 2014 is $280,000.
(a) Compute income taxes payable for 2014.
(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014.
(c) Prepare the income tax expense section of the income statement for 2014 beginning with the line
“Income before income taxes.”