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Unformatted text preview: Pretax financial income is $800,000. The tax rate is 40%. Instructions a) Prepare a schedule starting with pretax financial income and compute taxable income. b) Prepare the journal entry to record income taxes for 2011. Financial Income (GAAP) 800,000 Installment Contracts (120,000) temp F Taxable life insurance 3,500 perm Depreciation (17,500) temp F Taxable Tax exempt (10,000) perm Warranty Expense 8,000 temp F Deductible Taxable income(IRS) 664,000 Tax rate 40% taxes payable 265,600 Deferred Tax liability = (120000+17500)*40%=55000 Deferred Tax asset=8000*40%=3200 Tax expense 317400 Deferred tax asset 3200 Deferred tax liability 55000 Tax payable 265600...
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This note was uploaded on 03/27/2012 for the course ACCT 3312 taught by Professor Staff during the Spring '08 term at Texas A&M University, Corpus Christi.
- Spring '08