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PROBLEM IAccounting for Income Taxes (10 points) -The records of David K Corp. provided the...

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Accounting

PROBLEM IAccounting for Income Taxes (10 points)

-The records of David K Corp. provided the following data at the end of Years 2018 through 2020 relating to income tax allocation:

Yr 2018

Yr 2019

Yr 2020

Pretax accounting income

300,000

280,000

280,000

Taxable income (tax return)

260,000

300,000

300,000

Assume David K has one temporary difference. He recognized an expense in 2018 for tax purposes (prepaid expense) of $40,000, which will be amortized for accounting purposes over the next two years. The tax rate for all three years is 30%.

  1. Tax entry for end of year 2018.

Dec. 31, 2018

Assume everything is the same, but the tax rate in 2018 was 40%. (Tax rates for 2019 and 20120 are 20%)

  1. Tax entry for end of year 2018.

Dec. 31, 2018

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