Western Vole-taic started operations early in 2022, making and selling kits to convert gas vehicles into...

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Western Vole-taic started operations early in 2022, making and selling kits to convert gas vehicles into fully electric vehicles. The following events occurred during their first year: a. Paid $2,000 for life insurance on the CEO. b. Purchased manufacturing equipment with a 10-year life for $450,000. WV uses straight-line depreciation for financial statement purposes and a 30% rate for tax purposes. c. 2022 sales resulted in estimated product warranties of $40,000. WV incurred $3,500 of warranty costs during 2020. d. Earned $250,000 of income before income taxes, which is reported on their income statement. WV is subject to an income tax rate of 23%. Required: Show calculations for Income tax expense for 2022. Prepare a reconciliation between Income tax expense and Income tax payable. • Identify which of the reconciling items will carry over into 2023. How will the treatment of these items differ in 2023 from their treatment in 2022? Western Vole-taic started operations early in 2022, making and selling kits to convert gas vehicles into fully electric vehicles. The following events occurred during their first year: a. Paid $2,000 for life insurance on the CEO. b. Purchased manufacturing equipment with a 10-year life for $450,000. WV uses straight-line depreciation for financial statement purposes and a 30% rate for tax purposes. c. 2022 sales resulted in estimated product warranties of $40,000. WV incurred $3,500 of warranty costs during 2020. d. Earned $250,000 of income before income taxes, which is reported on their income statement. WV is subject to an income tax rate of 23%. Required: Show calculations for Income tax expense for 2022. Prepare a reconciliation between Income tax expense and Income tax payable. • Identify which of the reconciling items will carry over into 2023. How will the treatment of these items differ in 2023 from their treatment in 2022?

Answer rating: 100% (QA)

To calculate the income tax expense for 2022 and prepare the reconciliation between income tax expense and income tax payable we need to consider the ... View the full answer