E19-13B (One Difference, Multiple Rates, Effect of Beginning Balance versus No Beginning Deferred Ta

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E19-13B (One Difference, Multiple Rates, Effect of Beginning Balance versus No Beginning Deferred Taxes)At the end of 2014, Frontier Corporation has $360,000 of cumulative temporary differences that will result in reporting future taxable amounts as follows.

2015          $105,000

2016               90,000

2017               75,000

2018               90,000

                    $360,000

Tax rates enacted as of the beginning of 2013 are:

2013 and 2014      30%

2015                         40%

2016 and later        35%

Frontier’s taxable income for 2014 is $605,000. Taxable income is expected in all future years.

Instructions

(a) Prepare the journal entry for Frontier to record income taxes payable, deferred income taxes, and income tax expense for 2014, assuming that there were no deferred taxes at the end of 2013.

(b) Prepare the journal entry for Frontier to record income taxes payable, deferred income taxes, and income tax expense for 2014, assuming that there was a balance of $136,000 in a Deferred Tax Liability account at the end of 2013.

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