Fitzgerald Corp. reports pretax accounting income of $210,000, but because of a single temporary difference, taxable income is only $155,000. At the beginning of the year, no temporary differences existed. Fitzgerald is subject to a tax rate of 40%. Prepare the appropriate journal entry to record the company's income tax expense for the year.

For recording of the journal entry, first we have to compute the tax payable amount which is shown below:

Pretax accounting income tax expense = pretax accounting income * tax rate

= $210,000 * 40%

= $84,000

Tax payable for taxable income = Taxable income * tax rate

= $155,000 * 40%

= $62,000

Now, the journal entry would be:

Income tax expense A/c Dr $84,000

To Income tax payable $62,000

To Deferred tax liability $22,000

(Being income tax expense recorded)

The remaining amount has come under deferred tax liability.