South Texas Apartments reports pretax financial income of $68,400 for 2018. The following items cause taxable
income to be different then pretax financial income.
1.) Depreciation on the tax return is greater then depreciation on the income statement by $17,000.
2.) Rent collected on the tax return is greater than rent organized on the income statement by $21,000.
3.) Fines for pollution appear as an expense of $10,300 on the income statement.
South Texas apartments' tax rate is 40% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes all the beginning of 2018.
1.) Compute taxable income and income taxes payable for 2018
2.) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2018.
3.) Compute the effective income tax rate for 2018