Exercise 19-8 (Part Level Submission) Wildhorse  Company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 Pretax financial income $799,000 $944,000 $951,000 Excess depreciation expense on tax return (29,100 ) (39,300 ) (10,200 ) Excess warranty expense in financial income 19,500 9,800 8,100 Taxable income $789,400 $914,500 $948,900 The income tax rate for all years is 40%. (a) Your answer is correct. Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit 2017 2018 2019 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT Attempts: 1 of 3 used (b) Your answer is partially correct.  Try again. Indicate how deferred taxes will be reported on the 2019 balance sheet.  Wildhorse’s  product warranty is for 12 months. Wildhorse  Company Balance Sheet $ Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT LINK TO TEXT Attempts: 3 of 3 used (c) Prepare the income tax expense section of the income statement for 2019, beginning with the line “Pretax financial income.”  (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Wildhorse  Company Income Statement (Partial) $ $ $ Exercise 19-17 Vaughn Co. establishes a $128,000,000 liability at the end of 2017 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2018. Also, at the end of 2017, the company has $64,000,000 of temporary differences due to excess depreciation for tax purposes, $8,960,000 of which will reverse in 2018. The enacted tax rate for all years is 40%, and the company pays taxes of $81,920,000 on $204,800,000 of taxable income in 2017. Vaughn expects to have taxable income in 2018. Determine the deferred taxes to be reported at the end of 2017. Deferred tax assets $ Deferred tax liabilities $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Indicate how the deferred taxes computed above are to be reported on the balance sheet. Vaughn  Co. Balance Sheet $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Assuming that the only deferred tax account at the beginning of 2017 was a deferred tax liability of $ 12,800,000,  draft the income tax expense portion of the income statement for 2017, beginning with the line “Income before income taxes.” ( .

1. Exercise 19-8 (Part Level Submission)
Wildhorse
Company has the following two temporary differences between
its income tax expense and income taxes payable.
2017
2018
2019
Pretax financial income
$799,000
$944,000
$951,000
Excess depreciation expense on tax return
(29,100
)
(39,300
)
(10,200
)
Excess warranty expense in financial income
19,500

2. 9,800
8,100
Taxable income
$789,400
$914,500
$948,900
The income tax rate for all years is 40%.
(a)
Your answer is correct.
Assuming there were no temporary differences prior to 2017,
prepare the journal entry to record income tax expense, deferred
income taxes, and income taxes payable for 2017, 2018, and
2019.
(Credit account titles are automatically indented when amount

3. is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
Account Titles and Explanation
Debit
Credit
2017
2018
2019
Click if you would like to Show Work for this question:
Open Show Work
SHOW LIST OF ACCOUNTS
SHOW SOLUTION
LINK TO TEXT
LINK TO TEXT
Attempts: 1 of 3 used
(b)

4. Your answer is partially correct. Try again.
Indicate how deferred taxes will be reported on the 2019
balance sheet.
Wildhorse’s
product warranty is for 12 months.
Wildhorse
Company
Balance Sheet
$
Click if you would like to Show Work for this question:
Open Show Work
SHOW LIST OF ACCOUNTS
SHOW SOLUTION
LINK TO TEXT
LINK TO TEXT

5. Attempts: 3 of 3 used
(c)
Prepare the income tax expense section of the income statement
for 2019, beginning with the line “Pretax financial income.”
(Enter loss using either a negative sign preceding the number
e.g. -45 or parentheses e.g. (45).)
Wildhorse
Company
Income Statement (Partial)
$
$
$
Exercise 19-17
Vaughn Co. establishes a $128,000,000 liability at the end of
2017 for the estimated site-cleanup costs at two of its

6. manufacturing facilities. All related closing costs will be paid
and deducted on the tax return in 2018. Also, at the end of
2017, the company has $64,000,000 of temporary differences
due to excess depreciation for tax purposes, $8,960,000 of
which will reverse in 2018.
The enacted tax rate for all years is 40%, and the company pays
taxes of $81,920,000 on $204,800,000 of taxable income in
2017. Vaughn expects to have taxable income in 2018.
Determine the deferred taxes to be reported at the end of 2017.
Deferred tax assets
$
Deferred tax liabilities
$
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
Indicate how the deferred taxes computed above are to be

7. reported on the balance sheet.
Vaughn
Co.
Balance Sheet
$
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
Assuming that the only deferred tax account at the beginning of
2017 was a deferred tax liability of $
12,800,000,
draft the income tax expense portion of the income statement
for 2017, beginning with the line “Income before income taxes.”
(

8. Hint:
You must first compute (1) the amount of temporary difference
underlying the beginning $12,800,000 deferred tax liability,
then (2) the amount of temporary differences originating or
reversing during the year, and then (3) the amount of pretax
financial income.)
Vaughn
Co.
Income Statement (Partial)
$
$
$
Exercise 19-20 (Part Level Submission)
The differences between the book basis and tax basis of the
assets and liabilities of Headland Corporation at the end of 2016
are presented below.
Book Basis
Tax Basis
Accounts receivable
$53,400

9. $0
Litigation liability
32,000
0
It is estimated that the litigation liability will be settled in
2017. The difference in accounts receivable will result in
taxable amounts of $27,800 in 2017 and $25,600 in 2018. The
company has taxable income of $325,000 in 2016 and is
expected to have taxable income in each of the
following 2 years. Its enacted tax rate is 34% for all years. This
is the company’s first year of operations. The operating cycle of
the business is 2 years.
(a)
Prepare the journal entry to record income tax expense, deferred
income taxes, and income taxes payable for 2016.
(Credit account titles are automatically indented when amount
is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
Account Titles and Explanation
Debit
Credit
Click if you would like to Show Work for this question:
Open Show Work

10. Exercise 19-24 (Part Level Submission)
Headland Inc. reports the following pretax income (loss) for
both book and tax purposes.
(Assume the carryback provision is used where possible for a
net operating loss.)
Year
Pretax
Income (Loss)
Tax Rate
2015
$114,000
40
%
2016
83,000
40
%
2017
(253,000
)
45
%
2018

11. 115,000
45
%
The tax rates listed were all enacted by the beginning of 2015.
(a)
Your answer is partially correct. Try again.
Prepare the journal entries for years 2015–2018 to record
income tax expense (benefit) and income taxes payable
(refundable), and the tax effects of the loss carryback and loss
carryforward, assuming that based on the weight of available
evidence, it is more likely than not that one-half of the benefits
of the loss carryforward will not be realized.
(Credit account titles are automatically indented when amount
is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
Date
Account Titles and Explanation
Debit
Credit
2015

12. 2016
2017
(To record refund.)
(To record allowance.)
2018
(To record income taxes.)
(To adjust allowance.)