19) Duran Co, at the end of 20x1, its first year of operations, prepared a reconciliation...

Transcribed Image Text:

19) Duran Co, at the end of 20x1, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $300,000 Warranty expense reported in the income statement, but not deducted in the tax return Extra depreciation (tax depreciation minus accounting depreciation) Non-taxable interest revenue from municipal bonds 9,000 75,000 20,000 The use of the depreciable assets will result in taxable amounts of $25,000 in each of the next three years. 1) Compute the taxable income for 20x1 (show your computation. No credit if not) 2) Prepare the journal entry to record income tax expense, deferred income tax and income tax payable for 20x1, assuming an income tax rate of 40% for all years. 3) Compute net income for 20x1. 19) Duran Co, at the end of 20x1, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $300,000 Warranty expense reported in the income statement, but not deducted in the tax return Extra depreciation (tax depreciation minus accounting depreciation) Non-taxable interest revenue from municipal bonds 9,000 75,000 20,000 The use of the depreciable assets will result in taxable amounts of $25,000 in each of the next three years. 1) Compute the taxable income for 20x1 (show your computation. No credit if not) 2) Prepare the journal entry to record income tax expense, deferred income tax and income tax payable for 20x1, assuming an income tax rate of 40% for all years. 3) Compute net income for 20x1.

Answer rating: 100% (QA)

Answer Solution Calculation of Taxable income for the year 20X1 Pretax accounting income Per... View the full answer