For the year ended December 31. 2016. the Bowling Green Company $350.000 before provision for income tax(pretax
Question:
For the year ended December 31. 2016. the Bowling Green Company $350.000 before provision for income tax(pretax income). In arriving income tax purposes. the following differences were identified:
Bad expense recognized for book but not for tax $ 8,000
Depreciation deducted for tax purposes in excess of depreciation for accounting purposes 50,000
Income for installment sales re portable for income tax purposes in excess of income reported for financial reporting purposes reported income of at taxable income for 30,000
Assuming a corporate income tax rate of 30%, Huntsville's current income tax liability as of December 31.2016. is
a. $ 83.400.
b. $101,400.
c. $118,300
d. $129,000.
e. None of the above
Exihibit 18-1
On December 31, 2015, Fredericksburg, Inc. had no temporary differences that created deferred income taxes (i.e. no DTA or DTL). On January 2. 2016. a new machine was purchased for 530.000. Straight-line depreciation over a four-year life
(no residual value) was used for financial accounting. Depreciation expense for tax purposes was $11,000 in 2016. $9,000 in 2017, $6,000 in 2018, and 54,000 in 2015.
In each year. the income tax rate was 20% and Fredericksburg had no other items that created differences between pretax financial income and taxable income. Fredericksburg reported the following pretax financial income for 2016 through 2019:
2016 .............. $50,000
2017 .............. 40,000
2018 .............. 30,000
2019 .............. 60.000
2. Refer to Exihibit 18-1 The entry to record income taxes on December 31, 2017, would include a (hint: first compute Taxable Income Pretax income + (Rt - Rb) - (Xt-Xb) . Then compute the credit or debit to DTL. Then construct the entry to record taxes for 2017).
a. Debit to income tax expense for $7,700
b. credit to Income Taxes Payable for $8,000.
c. debit to Income Tax Expense for $8,200.
d. debit to Income Tax Expense for $8,000.
e. none of the above are correct
Expert Answer:
Computation of Income Tax 1 Financial Income 350000 Add Bad Expense recognised in books and not for ... View the full answer
