At the beginning of 2021; Cullumber, Inc. had a deferred tax asset of $26000 and a deferred tax liability of $36000. Pre-tax accounting income for 2021 was $1620000 and the enacted tax rate is 20%. The following items are included in Cullumber’s pre-tax income: Interest income from municipal bonds $132000 Accrued warranty costs, estimated to be paid in 2022 $272000 Operating loss carryforward $202000 Installment sales profit, will be taxed in 2022 $142000 Prepaid rent expense, will be used in 2022 $66000 What is Cullumber, Inc.’s taxable income for 2021? 1350000 2434000 1620000 1890000
At the beginning of 2021; Cullumber, Inc. had a deferred tax asset of $26000 and a deferred tax liability of $36000. Pre-tax accounting income for 2021 was $1620000 and the enacted tax rate is 20%. The following items are included in Cullumber’s pre-tax income: Interest income from municipal bonds $132000 Accrued warranty costs, estimated to be paid in 2022 $272000 Operating loss carryforward $202000 Installment sales profit, will be taxed in 2022 $142000 Prepaid rent expense, will be used in 2022 $66000 What is Cullumber, Inc.’s taxable income for 2021? 1350000 2434000 1620000 1890000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of 2021; Cullumber, Inc. had a
| Interest income from municipal bonds | $132000 |
| Accrued warranty costs, estimated to be paid in 2022 | $272000 |
| Operating loss carryforward | $202000 |
| Installment sales profit, will be taxed in 2022 | $142000 |
| Prepaid rent expense, will be used in 2022 | $66000 |
What is Cullumber, Inc.’s taxable income for 2021?
1350000
2434000
1620000
1890000
Expert Solution
Step 1 General Introduction
Taxable income is also described as adjusted gross income which is derived by deducting deduction or exemptions allowed from gross income. Taxable income is used for calculation of tax that an individual owes to government.
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