In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $58 million. Taxable income is $220 million in 2021. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Suppose the deferred portion of the rent collected was $116 millon at the end of 2022 Taxable Income is $1,360 million.

Required:
Prepare the appropriate journal entry to record income taxes Iin 2022.

Income tax will be debited because it is in expense in nature and the deferred tax is credited because it is a deferred tax asset the remaining amount will be credited because income tax payable is a liability in nature.

DEBIT CREDIT

Income tax Expense 325.5

Deferred tax 14.5m

(58m -116m) x 25%

Income tax payable 340m

(1360m x 25%)