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 Dat Description Debit Credit 1st Yr. Income Tax Expense 120.000 Income Tax Payable 40.000 Deferred Income Tax Payable 80.000 Income tax allocation due to timing differences 2nd Yr. Deferred Income Tax Payable 48,000 Income Tax Payable 48,000 Record $48, 000 of deferred tax as payable. c12-6C12 - 6 Date Description Debit Credit Income Tax Accounting Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 Deferred Income Tax Payable 48,000 Income Tax Payable 48,000 1st Yr. Income tax allocation due to timing differences. 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 Record $48,000 of deferred tax as payable. 2nd Yr