a. Journalize the two adjusting entries required to bring the accounts affected by the two taxes up to date as of December 31, the end of the current year.
b. What is the amount of tax expense for the current year?
Answers:
a. Dec. 31 Taxes Expense12,320
Prepaid Taxes12,320
Prepaid taxes expired
[($18,480 ÷ 12 months) × 8 months].
31 Taxes Expense45,000
Taxes Payable45,000
Accrued taxes.
b. $57,320 ($12,320 + $45,000)