Boilermaker Incorporated reported taxable income of $500,000 this year and paid federal income taxes of $105,000. Not included in the company's computation of taxable income is tax-exempt income of $20,000, disallowed meals and entertainment expenses of $30,000, and disallowed expenses related to the tax-exempt income of $1,000. Boilermaker deducted depreciation of $100,000 on its tax return. Under the alternative (E&P) depreciation method, the deduction would have been $60,000. Compute the company's current E&P. Note: Negative amount should be indicated with a minus sign.

Boilermaker Incorporated reported taxable income of $500,000 this year and paid federal income taxes of $105,000. Not included in the company's computation of taxable income is tax-exempt income of $20,000, disallowed meals and entertainment expenses of $30,000, and disallowed expenses related to the tax-exempt income of $1,000. Boilermaker deducted depreciation of $100,000 on its tax return. Under the alternative (E&P) depreciation method, the deduction would have been $60,000. Compute the company's current E&P. Note: Negative amount should be indicated with a minus sign.

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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Piper, Inc. reported a net deferred tax asset balance of $166,650 resulting from an estimated warranty expense accrual for book purposes. The total book-tax difference related to the bases of the estimated warranty liability is $505,000. The enacted statutory tax rate related to this balance changed from 33% to 28%, effective immediately. What journal entry will Piper need to make to adjust for this change in tax rates? Group of answer choices Deferred Tax Asset 25,250 Income Tax Payable 25,250 Income Tax Expense 25,250 Deferred Tax Asset 25,250 Income Tax Expense 46,662 Deferred Tax Asset 46,662 Deferred Tax Asset 46,662 Income Tax Payable 46,662
At the end of the prior year, Doubtful Inc. had a deferred tax asset of $20 million attributable to its only timing difference, a temporary difference of $80 million in a liability for estimated expenses. At that time, a valuation allowance of $4 million was established. At the end of the current year, the temporary difference is $45 million and Doubtful determines that the balance in the valuation account should now be $5 million. Taxable income is $15 million and the tax rate is 25% for all years. Required: Prepare journal entries to record Doubtful's income tax expense for the current year. Show well-labeled supporting computations for the income tax payable, the valuation allowance, and the change in the deferred tax asset account.
Peroni Company paid wages of $178,000 this year. Of this amount, $128,200 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 3.1% for Peroni Company. Due to cash flow problems, the company did not make any SUTA payments until after the Form 940 filing date. Compute the following; round your answers to the nearest cent. a. Amount of credit the company would receive against the FUTA tax for its SUTA contributions$ b. Amount that Peroni Company would pay to the federal government for its FUTA tax$ c. Amount that the company lost because of its late payments$ Feedback a. (Taxable wages x SUTA rate x 90%) + [Taxable wages x (5.4% -SUTA rate)] = Total FUTA tax creditb. (Taxable wages x Gross FUTA rate) – Total FUTA tax credit (part a above) = Net FUTA taxc. Net FUTA tax (part b above) – FUTA tax without penalty = penalty
S Corp. received cash of P200,000 that was included in revenues in its 2002 financial statements, of which P120,000 will not be taxable until 2003. S’s enacted tax rate for 2002 and 2003 is 32%. What amount should S report in its balance sheet as deferred income tax liability?
Fitzgerald Corp. reports pretax accounting income of $210,000, but because of a single temporary difference, taxable income is only $155,000. At the beginning of the year, no temporary differences existed. Fitzgerald is subject to a tax rate of 40%. Prepare the appropriate journal entry to record the company’s income tax expense for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Knowledge Check 02For its first year of operations, Marcus Corporation reported pretax accounting income of $274,800. However, because of a temporary difference in the amount of $19,200 relating to depreciation, taxable income is only $255,600. The tax rate is 39%. What amount should Marcus report as its deferred income tax liability in its balance sheet at the end of that year?
Lynch Company had a net deferred tax asset of $69,360 at the beginning of the year, representing a net deductible temporary difference of $204,000 (taxed at 34 percent). During the year, Lynch reported pretax book income of $816,000. Included in the computation were favorable temporary differences of $24,000 and unfavorable temporary differences of $52,000. At the beginning of the year, Congress reduced the corporate tax rate to 21 percent. Lynch's deferred income tax expense or benefit for the current year would be:
Thornton, Inc., had taxable income of $129632 for the year. The company's marginal tax rate was 34 percent and its average tax rate was 24.7 percent. How much did the company have to pay in taxes for the year? a.30432 b.44075 c.30776 d.29074
Lion, Inc. reported taxable income of $530,000 for its most recent current year end. Not included in the company's computation of taxable income were: tax-exempt interest of $17,000 and disallowed expenses of $21,000. Lion deducted depreciation of $137,000 on its tax return. Under the alternative (E&P) depreciation method, the deduction would have been $87,000. Lion paid out dividends to its 4 equal shareholders of $20,000 each on December 1, 2021. Lion has been incorporated for a number of years and has accumulated earnings and profits of $1,870,000 as computed at the beginning of the current year. a. Compute the company's current E&P for the year ended December 31, 2021. b. Compute the company's accumulated E&P for January 1, 2022.
At the end of the year, the deferred tax asset account had a balance of $12 million attributable to a temporary difference of $48 million in a liability for estimated expenses. Taxable income is $68 million. No temporary differences existed at the beginning of the year, and the tax rate is 25% Prepare the journal entry(s) to record income taxes, assuming it is more likely than not that three-fourths of the deferred tax asset will not ultimately be realized. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 2 Record the income tax expense. Note: Enter debits before credits. Transaction General Journal Debit Credit
Grand Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Grand's beginning book (tax) basis in its fixed assets was $2,000,000 ($1,800,000) and its ending book (tax) basis is $2,500,000 ($1,900,000). Compute the company's current income tax expense or benefit. Note: Leave no answer blank. Enter N/A or zero. Current income tax Deferred income tax N/A $ expense
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