E19-2B (Two Differences, No Beginning Deferred Taxes, Tracked through 2 Years)The following information is available for DirectMedia Inc. for 2014.
1. Excess of tax depreciation over book depreciation, $80,000. This $80,000 difference will reverse equally over the next 4 years.
2. Deferral, for book purposes, of $25,000 of subscription income received in advance. The subscription income will be earned in 2015.
3. Pretax financial income, $160,000.
4. Tax rate for all years, 35%.
(a) Compute taxable income for 2014.
(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014.
(c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015, assuming taxable income of $255,000.
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