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Assuming a 30% income tax rate, what is the amount of income tax currently payable?

Assuming a 30% income tax rate, what is the amount of income tax currently payable?

FINANCIAL ACCOUNTING
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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The following financial figures are reported by Payne Incorporated and its 80% owned subsidiary, Shelley Company, for the year ended December 31 of the current year. Shelley paid dividends of $25,000 during the current year. | Items | Payne Incorporated | Shelley Company | |---------------------------|--------------------|-----------------| | Sales | $200,000 | $150,000 | | Cost of Goods Sold | ($100,000) | ($100,000) | | Operating Expenses | ($50,000) | ($25,000) | | Dividend Income | $10,000 | $0 | | Net Income | $60,000 | $25,000 | A goodwill impairment loss relating to Payne’s takeover of Shelley is $2,500 per year. In the previous year, unrealized gains of $10,000 on upstream transfers were deferred to the current year. In the current year, unrealized gains of $5,000 on upstream sales were deferred to next year. Assuming a 30% income tax rate, what is the amount of income tax currently payable?
Transcribed Image Text:The following financial figures are reported by Payne Incorporated and its 80% owned subsidiary, Shelley Company, for the year ended December 31 of the current year. Shelley paid dividends of $25,000 during the current year. | Items | Payne Incorporated | Shelley Company | |---------------------------|--------------------|-----------------| | Sales | $200,000 | $150,000 | | Cost of Goods Sold | ($100,000) | ($100,000) | | Operating Expenses | ($50,000) | ($25,000) | | Dividend Income | $10,000 | $0 | | Net Income | $60,000 | $25,000 | A goodwill impairment loss relating to Payne’s takeover of Shelley is $2,500 per year. In the previous year, unrealized gains of $10,000 on upstream transfers were deferred to the current year. In the current year, unrealized gains of $5,000 on upstream sales were deferred to next year. Assuming a 30% income tax rate, what is the amount of income tax currently payable?
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