Income Tax Accounting Financial reporting and tax reporting summary: Income before tax $300,000 x 40% rate $120,000 Taxable income $100,000 x 40% rate $40,000 Date Description Debit Credit 1st Yr. Income Tax Expense 120,000 Income Tax Payable 40.000 Deferred Income Tax Payable 80.000 The income tax payable is based on the taxable income and is a current liability due and payable. c128C12 - 8 Date Description Debit Credit Income Tax Accounting Financial reporting and tax reporting summary: Income before tax $300,000 x 40% rate = $120,000 Taxable income $100,000 x 40% rate = $40,000 Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 The income tax payable is based on the taxable income and is a current liability due and payable. 1st Yr