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Required: Prepare a compound journal entry to recore the income tax expense. Show-well labeled computations...

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Accounting

Required: Prepare a compound journal entry to recore the income tax expense. Show-well labeled computations

Pocus, Inc., reports warranty expense when related products are sold. For tax purposes, the warranty costs are deductible as incurred. At the end of the current year, Pocus has a warranty liability of $300,000 and taxable income of $20,000,000. At the end of the previous year, Pocus reported a deferred tax asset of $80,000 related to the difference in reporting warranty expense, its only temporary difference. The enact tax rate is 30% each year.

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