XYZ Corporation has the following balances in its books of accounts as at December 31, 2022: Cash
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Question:
XYZ Corporation has the following balances in its books of accounts as at December 31, 2022:
- Cash and cash equivalents: $100,000
- Accounts receivable: $200,000
- Inventory: $400,000
- Property, plant and equipment: $1,000,000
- Accounts payable: $300,000
- Long-term debt: $500,000
- Common stock: $300,000
- Retained earnings: $700,000
The corporation is subject to a 30% corporate tax rate. As the auditor of XYZ Corporation, you are required to perform a substantive test of the income tax expense account for the year ended December 31, 2022.
a) Calculate the income tax expense for the year ended December 31, 2022. (8 marks)
b) Prepare the income tax expense journal entry to be recorded by the corporation. (4 marks)
c) Compute the net income after taxes for the year ended December 31, 2022. (8 marks)
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
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