At the end of 2017, payne industries had a deferred tax asset account with a balance of $30 million attributable to a temporary book-tax difference of $75 million in a liability for estimated expenses. at the end of 2018, the temporary difference is $70 million. payne has no other temporary differences. taxable income for 2018 is $180 million and the tax rate is 40%. payne has a valuation allowance of $10 million for the deferred tax asset at the beginning of 2018.

required:
1. prepare the journal entry(s) to record payne’s income taxes for 2018, assuming it is more likely than not that the deferred tax asset will be realized.
2. prepare the journal entry(s) to record payne’s income taxes for 2018, assuming it is more likely than not that one-fourth of the deferred tax asset will ultimately be realized.

If a company’s employees are angry about their work, a visiting auditor may also become agitated, illustrating the power of

Bridgeport company began operations at the beginning of 2018. the following information pertains to this company. 1. pretax financial income for 2018 is $115,000. 2. the tax rate enacted for 2018 and future years is 40%. 3. differences between the 2018 income statement and tax return are listed below: (a) warranty expense accrued for financial reporting purposes amounts to $7,500. warranty deductions per the tax return amount to $2,200. (b) gross profit on construction contracts using the percentage-of-completion method per books amounts to $94,700. gross profit on construction contracts for tax purposes amounts to $67,100. (c) depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. depreciation of these assets amounts to $75,700 for the tax return. (d) a $3,600 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. 4. taxable income is expected for the next few years. (assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) prepare the reconciliation schedule for 2017 and future years. (b) prepare the journal entry to record income tax expense for 2017. (c) prepare the income tax expense section of the income statement beginning with “income before income taxes.” (d) determine how the deferred taxes will appear on the balance sheet at the end of 2017.

This exercise illustrates that poor quality can affect schedules and costs. a manufacturing process has 130 customer orders to fill. each order requires one component part that is purchased from a supplier. however, typically, 3% of the components are identified as defective, and the components can be assumed to be independent. (a) if the manufacturer stocks 130 components, what is the probability that the 130 orders can be filled without reordering components? (b) if the manufacturer stocks 132 components, what is the probability that the 130 orders can be filled without reordering components? (c) if the manufacturer stocks 135 components, what is the probability that the 130 orders can be filled without reordering components?