Answer only c.Thanks in advance.i trust Bartleby Case 12-7 Accounting for Income Taxes: Different ApproachesMark or Make is a bourbon distillery. Sales have been steady for the past three years, and operatingcosts have remained unchanged. On January 1, 2019, Mark or Make took advantage of a special dealto prepay its rent for three years at a substantial savings. The amount of the prepayment was$60,000. The income statement items (excluding the rent) are shown here.201920202021Gross profit on sales 350,000 349,000 351,000Operating expense 210,000 210,000 210,000Assume that the rental is deducted on the corporate tax purposes in 2019 and that there are no othertemporary differences between taxable income and pretax accounting income. In addition, there areno permanent differences between taxable income and pretax accounting income. The corporate taxrate for all three years is 30%.Required:a. Construct income statements for 2019, 2020, and 2021 under the following approaches tointerperiod income tax allocation:i. No allocationii. Comprehensive allocationb. Do you believe that no allocation distorts Mark or Make’s net income? Explain.c. For years 2019 and 2020, Mark or Make reported net income applying the concept ofcomprehensive interperiod income tax allocation. During 2020, Congress passed a new tax lawthat will increase the corporate tax rate from 30 to 33%. Reconstruct the income statements for2020 and 2019 under the following assumptions:i. Mark or Make uses the deferred method to account for interperiod income tax allocation.ii. Mark or Make uses the asset-liability approach to account for interperiod income taxallocation.

Tax: A tax is a compulsory charge or a levy imposed upon a taxpayer by a government organization to…

c. For years 2019 and 2020, Mark or Make reported net income applying the concept of comprehensive interperiod income tax allocation. During 2020, Congress passed a new tax law that will increase the corporate tax rate from 30 to 33%. Reconstruct the income statements for 2020 and 2019 under the following assumptions: i. Mark or Make uses the deferred method to account for interperiod income tax allocation. ii. Mark or Make uses the asset-liability approach to account for interperiod income tax allocation.

c. For years 2019 and 2020, Mark or Make reported net income applying the concept of comprehensive interperiod income tax allocation. During 2020, Congress passed a new tax law that will increase the corporate tax rate from 30 to 33%. Reconstruct the income statements for 2020 and 2019 under the following assumptions: i. Mark or Make uses the deferred method to account for interperiod income tax allocation. ii. Mark or Make uses the asset-liability approach to account for interperiod income tax allocation.

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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