The following facts relate to Duncan Corporation. 1. Deferred tax liability, January 1, 2019, $80,000.
2. Deferred tax asset, January 1, 2019, $30,000.
3. Taxable income for 2019, $115,000.
4. Cumulative temporary difference at December 31, 2019, giving rise to future taxable amounts, $250,000.
5. Cumulative temporary difference at December 31, 2019, giving rise to future deductible amounts, $95,000.
6. Tax rate for all years, 40%. No permanent differences exist.
7. The company is expected to operate profitably in the future.

Required:
a. Compute the amount of accounting income for 2019.
b. Prepare the journal entry to record income tax expense, deferred income taxes, and income payable for 2019

Duncan Corporation

a. The amount of the accounting income for 2019 is:

= $270,000

b. Journal Entries:

Debit Income tax expense $46,000

Credit Income tax payable $46,000

To record the income tax expense for 2019.

Debit Deferred tax asset $30,000

Credit Profit and Loss $30,000

To record the deferred tax asset

Debit Profit and Loss $80,000

Credit Deferred tax liability $80,000

To record the deferred tax liability.

Explanation:

a) Data and Calculations:

Taxable income for 2019 =                             $115,000

add Cumulative temporary difference, giving

 rise to future taxable amounts =                $250,000

less Cumulative temporary difference, giving

rise to future deductible amounts =             $95,000

Accounting income for 2019                       $270,000

Income tax expense:

Taxable income = $115,000

Tax rate (40%)         46,000

After-tax income  $69,000

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