E18-4 (One Reversing Difference through Three Years, One Rate) Allen Corporation reports the following amounts...
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E18-4 (One Reversing Difference through Three Years, One Rate) Allen Corporation reports the following amounts in its fi rst three years of operations. 2017 2018 2019 Taxable income $245,000 $121,000 $125,000 Accounting income 160,000 139,000 131,000 The difference between taxable income and accounting income is due to one reversing difference. The tax rate is 30% for all years and the company expects to continue with profi table operations in the future. Instructions (a) For each year, (1) identify the amount of the reversing difference originating or reversing during that year, and (2) indicate the amount of the temporary difference at the end of the year. (b) Indicate the balance in the related deferred tax account at the end of each year and identify it as a deferred tax asset or liability. (c) Prepare the journal entries at the end of all three years to record current and deferred taxes.
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