"03-08Homework Quiz—12

"03-08Homework Quiz—12

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Homework Quiz—12 Name Section ABC Company’s pretax accounting income is $500,000 and its tax rate is 40%. The following items cause taxable income to be different from pretax accounting income: a. Depreciation expense on the tax return is $120,000 and is $90,000 in the calculation of pretax accounting income. b. Rent paid on the tax return is $80,000 and is $60,000 in the calculation of pretax accounting income. c. Municipal bond interest revenue in the calculation of pretax accounting income is $55,000. Municipal bond interest revenue is not taxable. Required : 1. Taxable income is: $500,000 – $30,000 - $20,000 - $55,000 = $395,000 2. Income tax payable is: 40% x $395,000 = $158,000. 3. The journal entry to record income tax expense, deferred income taxes, and income taxes payable is: Debit Credit Income tax expense 178,000 Income tax payable 158,000 Deferred tax liability
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Unformatted text preview: 20,000 4. The effective income tax rate is: $178,000/$500,000 = 35.6% 1 Homework Quiz—11 Name Section ABC Company’s pretax accounting income is $500,000 and its tax rate is 40%. The following items cause taxable income to be different from pretax accounting income: a. Depreciation expense on the tax return is $120,000 and is $90,000 in the calculation of pretax accounting income. b. Rent paid on the tax return is $80,000 and is $60,000 in the calculation of pretax accounting income. c. Municipal bond interest revenue in the calculation of pretax accounting income is $55,000. Municipal bond interest revenue is not taxable. Required : 1. Taxable income is: 2. Income tax payable is: 3. The journal entry to record income tax expense, deferred income taxes, and income taxes payable is: Debit Credit 4. The effective income tax rate is: 2...
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This note was uploaded on 04/09/2011 for the course MGMT 351 taught by Professor Staff during the Winter '08 term at Purdue University.

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"03-08Homework Quiz—12

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