At the end of 2023, its first year of operations, Sheffield Corp. prepared the following reconciliation between pre-tax accounting income and taxable income: Pre-tax accounting income $316000 Estimated lawsuit expense 759000 Instalment sales (632000) Taxable income $443000 The estimated lawsuit expense of $759000 will be deductible in 2025 when it is expected to be paid. The instalment sales will be realized at $316000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is O $158000. O $94800. O $316000. $132900.
At the end of 2023, its first year of operations, Sheffield Corp. prepared the following reconciliation between pre-tax accounting income and taxable income: Pre-tax accounting income $316000 Estimated lawsuit expense 759000 Instalment sales (632000) Taxable income $443000 The estimated lawsuit expense of $759000 will be deductible in 2025 when it is expected to be paid. The instalment sales will be realized at $316000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is O $158000. O $94800. O $316000. $132900.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At the end of 2023, its first year of operations, Sheffield Corp. prepared the following reconciliation between pre-tax accounting
income and taxable income:
Pre-tax accounting income $316000
Estimated lawsuit expense
759000
Instalment sales
(632000)
Taxable income
$443000
The estimated lawsuit expense of $759000 will be deductible in 2025 when it is expected to be paid. The instalment sales will be
realized at $316000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be
reported on the income statement is
O $158000.
O $94800.
O $316000.
$132900.
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