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Question 5 Not changed since last attempt Marked out of 8.00 Recording Multiple Temporary Differences, Change in Enacted Tax Rate Required Wittco Company reports pretax GAAP income in Year 1, its first year of operations, of $350,000. Temporary differences in the GAAP basis and tax basis of assets arose during the year from the following two sources. Prepayment of Year 2 rent in the amount of $84,000 in Year 1. Installment sale totaling $126,000, with cash collections expected in two equal amounts in Year 3 and Year 4. The enacted tax rates are 25% in Year 1, 30% in Year 2, and 40% in Year 3 and thereafter. a. Record the income tax journal entry on December 31 of Year 1. Date Dec. 31, Year 1 Account Name PFlag question Income Tax Expense Deferred Tax Liability Income Tax Payable To record income tax expense Date Dec. 31, Year 1 Income Tax Expense Account Name Dr. 65,600 0 0 Dr. Cr. 70.000 eBook 0 30,600 35,000 b. Record the income tax journal entry on December 31 of Year 1, assuming that a new tax law is passed in Year 1 decreasing the tax rate to 20% for Year 1 and all years thereafter. Videos Cr. Print

Recording Multiple Temporary Differences, Change in Enacted Tax Rate Wittco Company reports pretax GAAP income in Year 1, its first year of operations, of $350,000. Temporary differences in the GAAP basis and tax basis of assets arose during the year from the following two sources. - Prepayment of Year 2 rent in the amount of $84,000 in Year 1. - instaliment sale totaling $126,000, with cash collections expected in two equal amounts in Year 3 and Year 4. The enacted tax rates are 25% in Year 1,30% in Year 2 , and 40% in Year 3 and thereafter. Required a. Record the income tax journal entry on December 31 of Year 1. b. Record the income tax journal entry on December 31 of Year 1 , assuming that a new tax law is passed in Year 1 decreasing the tax rate to 20s for Year 1 and all years thereafter

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