Gobble Goop Corp incorporated in 2008. In their current year (2011), the company has furnished you (a super star accountant) with the following information regarding their financial and tax returns: Sales with installments are reported at $50,000. For tax purposes, these sales are listed at $42,000. Bad debt expenses for the year are $4,500. During the year, $3,000 of bad debts were written-off. Depreciation per financial statements amounted to $85,000 and $98,000 for tax purposes. A new air hockey table cost $6,000. The company paid $10,000 in speeding tickets. The company collected $35,000 from a life insurance policy. Gobble Goop also have a $25,000 deferred tax asset and a $45,000 deferred tax liability. Net income for the year is $125,000 (pre tax) and the tax rate is 30%. What would it be if the installment sales were a reversing difference? What if the tax rate changed from 30% to 40% at the beginning of the year? What if the deferred tax asset was a NOL?

Answer rating: 100% (QA)

SOLUTION 1 If the installment sales were a reversing difference how would the company account for the reversing difference in its financial statements ... View the full answer