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1. A reconciliation of Sauder Company's pretax accounting income with its taxable income for 2014,...

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Accounting

1. A reconciliation of Sauder Company's pretax accounting income with its taxable income for 2014, its first year of operations, is as follows: Pretax accounting income $8,000,000 less Excess tax depreciation (240,000) =Taxable income $7,760,000

The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 40% in 2014, 35% in 2015 and 2016, and 30% in 2017.

Required:

(a) Compute the total deferred tax liability to be reported on Sauder's balance sheet at December 31, 2014.

(b) Create the journal entry required at December 31, 2014 to record tax expense.

This is the solution I just want the information of how the professor got the numbers

1.(a)

2014

2015

2016

2017

Total

(240,000)

80,000

80,000

80,000

0

Tax Rate

0.40

0.35

0.35

0.30

DTL

28,000

28,000

24,000

80,000

7,760,000

Tax Payable

3,104,000

(b)

Journal Entry

Dr.

Cr.

Tax Expense

3,184,000

Taxes Payable

3,104,000

Deferred Tax Liability

80,000

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