Homework Quiz&acirc;€”14 S11 Section 3

# Homework Quiz&acirc;€”14 S11 Section 3 - 102,000 4...

This preview shows pages 1–2. Sign up to view the full content.

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

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

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 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: 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...
View Full Document

## This note was uploaded on 03/03/2012 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue.

### Page1 / 2

Homework Quiz&acirc;€”14 S11 Section 3 - 102,000 4...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online