Homework Quiz—14 S11 Section 1

Homework Quiz—14 S11 Section 1 - 8,000 4....

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Section 1 Spring 11 Homework Quiz —14 Name Section ABC Company’s pretax accounting income is $600,000 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 $150,000 and is $105,000 in the calculation of pretax accounting income. b. Rent revenue on the tax return is $90,000 and is $65,000 in the calculation of pretax accounting income. c. Municipal bond interest revenue in the calculation of pretax accounting income is $60,000. Municipal bond interest revenue is not taxable. Required : 1. Taxable income is: $600,000 – $45,000 + $25,000 - $60,000 = $520,000 2. Income tax payable is: 40% x $520,000 = $208,000. 3. The journal entry to record income tax expense, deferred income taxes, and income taxes payable is: Debit Credit Income tax expense 216,000 Income tax payable 208,000 Deferred tax liability
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Unformatted text preview: 8,000 4. The effective income tax rate is: $216,000/$600,000 = 36.0% 1 Section 1 Spring 11 Homework Quiz 14 Name Section ABC Companys pretax accounting income is $600,000 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 $150,000 and is $105,000 in the calculation of pretax accounting income. b. Rent revenue on the tax return is $90,000 and is $65,000 in the calculation of pretax accounting income. c. Municipal bond interest revenue in the calculation of pretax accounting income is $60,000. 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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Homework Quiz—14 S11 Section 1 - 8,000 4....

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