Homework Quiz—14 S11 Section 3

Homework Quiz—14 S11 Section 3 - 102,000 4....

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Section 3 Spring 11 Homework Quiz —14 Name Section ABC Company’s pretax accounting income is $775,000 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 $500,000 and is $205,000 in the calculation of pretax accounting income. b. Rent revenue on the tax return is $120,000 and is $80,000 in the calculation of pretax accounting income. c. Municipal bond interest revenue in the calculation of pretax accounting income is $95,000. Municipal bond interest revenue is not taxable. Required : 1. Taxable income is: $775,000 – $295,000 - $40,000 - $95,000 = $345,000 2. Income tax payable is: 40% x $345,000 = $138,000. 3. The journal entry to record income tax expense, deferred income taxes, and income taxes payable is: Debit Credit Income tax expense 240,000 Income tax payable 138,000 Deferred tax liability
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Unformatted text preview: 102,000 4. The effective income tax rate is: $240,000/$775,000 = 30.97% 1 Section 3 Spring 11 Homework Quiz 14 Name Section ABC Companys pretax accounting income is $775,000 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 $500,000 and is $205,000 in the calculation of pretax accounting income. b. Rent revenue on the tax return is $120,000 and is $80,000 in the calculation of pretax accounting income. c. Municipal bond interest revenue in the calculation of pretax accounting income is $95,000. 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 3 - 102,000 4....

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