The following data represent the differences between accounting and tax income for Seafood Imports Inc., whose pre-tax
Question:
The following data represent the differences between accounting and tax income for Seafood Imports Inc., whose pre-tax accounting income is $750,000 for the year ended December 31. The company's income lax rate is 45%. Additional information relevant to income taxes includes the following.
a. Capital cost allowance of $270,000 exceeded accounting depreciation expense of $150,000 in the current year.
b. Rents of $30,000, applicable to next year, had been collected in December and deferred for financial statement purposes but are taxable in the year received.
c. In a previous year, the company established a provision for product warranty expense. A summary of the current year's transactions appears below: li. Warranty Expense for the year lit. Payments made to fulfill product warranties 42.500 35,000
d. Insurance expense to cover the company's executive officers was $7,000 for the year.
Required:
1. Calculate Taxable Income.
2. Prepare all the journal entries to record income taxes for Seafood Imports.
