Possible estimated outcome
Individual probability
of occurring
$370,000
10%
$333,000
12%
$275,000
29%
$142,000
26%
$101,000
23%
Prepare the journal entry to record the current year’s tax provision and the liability for the uncertain tax provision.
What will be an ideal response?
Answer:
Income Tax Expense
163,350
Income Tax Payable
132,000
Income Tax Contingency
31,350
Expense: (770,000 × 33%) – (275,000 × 33%). Contingency: (370,000 – 275,000) × 33%