Assignment $4.$ Spring $2024$

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Broncos Co$.$ reports pretax financial income of $$95,000$ for $20$x$1.$ The following items cause taxable income to be different than pretax financial income:

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$1.$ Depreciation on the tax return is greater than depreciation on the income statement by $$16,000.$

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$2.$ Rent collected on the tax return is greater than rent earned on the income statement by $$22,000.$

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$3.$ Fines for pollution appear as an expense of $$11,000$ on the income statement.

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$4.$ Bad debt expense of $$12,000$ was recognized $($reported on $20$x$1$ income statement$).$ The account will be written off $($tax deductible$)$ in $20$x$2.$

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$5.$ Prepaid expenses deducted in the tax return, but not included in the income statement: $$8,000.$

Broncos$$ tax rate is $30\%$ for all years and the company expects to report taxable income in all future years.

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a$)$ Compute taxable income for $20$x$1.$

b$)$ Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for $20$x$1.$

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c$)$ Compute net income for $20$x$1.$