Exercise 19-4
Zurich Company reports pretax financial income of $70,000 for 2014. The following items cause
taxable income to be different than pretax financial income.
Depreciation on the tax return is greater than depreciation on the income statement by
$16,000.
2. Rent collected on the tax return is greater than rent earned on the income statement by
$22,000.
3. Fines for pollution appear as an expense of $11,000 on the income statement.
1.
Zurich’s tax rate is 30% for all years, and the company expects to report taxable income in all
future years. There are no deferred taxes at the beginning of 2014.
Your answer is correct.
Compute taxable income and income taxes payable for 2014.
Taxable income
Income taxes payable
$
87000
$
26100
Your answer is partially correct. Try again.
Prepare the journal entry to record income tax expense, deferred income taxes, and income
taxes payable for 2014. (Credit account titles are automatically indented when amount
is entered. Do not indent manually.)
Account Titles and
Explanation
Deferred T
Debit
Credit
6600
Deferred T
4800
Income Tax
26100
Income Tax
24300
Your answer is incorrect. Try again.
Prepare the income tax expense section of the income statement for 2014, beginning with the
line “Income before income taxes.”. (Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45).)
Zurich Company
Income Statement (Partial)
Year ended December 31, 2014
$
$
$
Your answer is incorrect. Try again.
Compute the effective income tax rate for 2014. (Round answer to 1 decimal places, e.g.
25.5.)
Effective income tax
rate
%
Exercise 19-8
Button Company has the following two temporary differences between its income tax expense and
income taxes payable.
