Alain company prepared draft financial statements that showe income before tax for the year ended December 31, 2021 at Pe The board of directors authorized the financial statements for March 20,2022. A manufacturing plant was destroyed by fire o 15, 2022 resulting in a financial loss of P2,500,000. Insurance property amounted to P4,000,000 and the claim was receive February 14, 2022. Repairs will start on April 2022. What amour reported as profit before tax in the financial statements? O 2500000 O 9000000

Alain company prepared draft financial statements that showe income before tax for the year ended December 31, 2021 at Pe The board of directors authorized the financial statements for March 20,2022. A manufacturing plant was destroyed by fire o 15, 2022 resulting in a financial loss of P2,500,000. Insurance property amounted to P4,000,000 and the claim was receive February 14, 2022. Repairs will start on April 2022. What amour reported as profit before tax in the financial statements? O 2500000 O 9000000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of $650,000. The company had extra depreciation taken for tax purposes in the amount of $975,000. Estimated expenses that were deducted for financial income but not yet paid amounted to $425,000. It is estimated that the expenses will be paid in 2022. The tax rate for all years is 25% In the journal entry at the end of the year that records income tax expense, deferred taxes and income taxes payable, what is the entry to the Income Tax Payable account? Question 19 options: a) credit Income Tax Payable account by $162,500 b) credit Income Tax Payable account by $300,000. c) credit to Income Tax Payable account by $25,000. d) credit Income Tax Payable account by $512,500.
Wynn Farms reported a net operating loss of $180,000 for financial reporting and tax purposes in 2024. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2020 $ 80,000 20% $ 16,000 2021 90,000 20 18,000 2022 160,000 25 40,000 2023 80,000 35 28,000 Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
At the beginning of 2021, Pitman Co. had pretax financial income of $1,200,000. Additionally, there was a timing difference of $300,000 due to an accounts receivable that will not be collected until the following year. The tax rate us 30%. A. Calculate the total taxable income for 2021. B. Calculate Income tax expense, income tax payable, and the deferred amount for 2021, and create the journal entry.
Hoover Property and Casualty Insurance Corporation reported a net operating loss of $110,000 for financial reporting and tax purposes in 2019. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Hoover's first two years of operation were as follows: \table [[2017, $50,000, 30%
Pearl Inc. incurred a net operating loss of $455,000 in 2020. The tax rate for all years is 20%. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
The accounting records of Sandhill Inc. show the following data for 2020 (its fırst year of operations). 1. Life insurance expense on officers was $9,000. Equipment was acquired in early January for $321,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Sandhill used a 30% rate to calculate depreciation. 2. 3. Interest revenue on State of New York bonds totaled $3,800. Product warranties were estimated to be $51,600 in 2020. Actual repair and labor costs related to the warranties in 2020 were $10,100. The remainder is estimated to be paid evenly in 2021 and 2022. 4. 5. Gross profit on an accrual basis was $93,000. For tax purposes, $79,000 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,400. 7. Pretax financial income was $817,800. The tax rate is 30%.
Charlotte, Inc. began business on January 1, 2021. Its pretax financial income for the first two years was as follows: 2021 $550,000 2022 590,000 The following items caused the only differences between pretax financial income and taxable income. In 2021, the company terminated a top executive and agreed to 120,000 of severance pay. The amount will be paid $40,000 per year for 2021 - 2023. The 2021 and 2022 payments were made. For financial statement purposes, the $120,000 was expensed in 2021. For tax purposes, the severance pay is deductible as it is paid. In 2021, the company reported depreciation expense in its financial statements of $82,000. Depreciation expense for tax purposes was 134,500. The difference will reverse evenly over the next three years (2022-2024) The tax rate in 2021 is 20% and no tax rate changes have been enacted that affect the years 2022 – 2024. Required: Determine taxable income for 2021…
At the end of its first year of operations on December 31, 2022, the Metro Company reported pretax financial income of $100,000. An investigation of that income revealed the following items:· Bad debts expense of $12,000 was recognized (reported on 2022 income statement). The accounts will be written off (tax deductible) in 2023.· Interest received on municipal bonds: $7,500.· Warranty expenses of $16,000 were accrued for financial reporting purposes, but were not expected to result in a cash payment until 2023.· Depreciation on the tax return exceeded depreciation for financial reporting purposes by $32,000.Assume that any deferred tax assets are considered more likely than not to be realized. The enacted income tax rate for all years is 25%.Required:1) Compute taxable income. Show your calculation. If not, no credit.2) Prepare the entry to record income tax expense and any related assets and liabilities for Metro on December 31, 2022.
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Foster Company reported pretax financial income of $350,000 for 2021. Foster uses an accelerated form of depreciation for tax purposes, and it exceeds book depreciation by $50,000. The tax rate for 2021 is 20%. Record the journal entry at the end of 2021, be sure to include calculations, as well as income tax expense, a deferred account, and income tax payable.
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