Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $760,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $860,000, which includes interest revenue of $24,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Required:
Prepare the journal entry to record income taxes.

Dr Income Tax Expense $209,000

Cr Income Tax Payable $180,500

Cr Deferred Tax Liability$28,500

Explanation:

Preparation of the journal entry to record income taxes

First step is to determine the Current tax liability and Deferred tax liability

Current year Future year

Pre Tax Accounting Income $860,000 $0

Permanent differences

Municipal bond Interest ($24,000) $0

Temporary differences

Depreciation expense ($114,000) $114,000

[($760,000*40%)-($760,000/4)]

Taxable income $722,000 $114,000

Enacted tax rate 25% 25%

Current tax liability $180,500

($772,000*25%)

Deferred tax liability $28,500

($114,000*25%)

Now let Prepare the journal entry

Dr Income Tax Expense $209,000

($180,500+$28,500)

Cr Income Tax Payable $180,500

Cr Deferred Tax Liability$28,500

(Being income tax and deferred tax recorded for first year)

answer; ///i believe that the correct answer is (a) it is the means by which a person earns money;

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.