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Cramer Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Cramer's federal income tax expense per books was $200,000. • Cramer's book income included $10,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. • Cramer recognized $10,000 of capital losses this year and no capital gains. • Cramer recorded $8,000 of book expense for meals and $10,000 of book expense for entertainment costs. • Cramer's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. Required: a. Compute Cramer's federal taxable income and regular tax liability.

Cramer Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Cramer's federal income tax expense per books was $200,000. • Cramer's book income included $10,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. • Cramer recognized $10,000 of capital losses this year and no capital gains. • Cramer recorded $8,000 of book expense for meals and $10,000 of book expense for entertainment costs. • Cramer's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. Required: a. Compute Cramer's federal taxable income and regular tax liability.

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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Required: a. Compute Cramer's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income. X Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income. (Any Expenses (Line 5) and Deductions (Line 8) that are not included under Depreciation, Charitable Contributions, and Travel and Entertainment should be combined in the corresponding line item "Other". Enter all amounts as positive. Enter your answers in whole dollars not in millions.) Show lessa Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions 1,000,000 O 7 Income recorded on books this year not included on 200,000 O 10,000 O 1 Net income (loss) per books 2 Federal income tax per books this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest 4 Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted 8 Deductions on this return not charged against book on this return (itemize): income this year (itemize): a Depreciation b Charitable contributions a Depreciation 75,000 O b Charitable contributions 18,000 X 75,000 75,000 c Travel and entertainment c Other (include all items) d Other (include all items) 6 Add lines 1 through 5 18,000 1,228.000 9 Add lines 7 and 8 10 Income (page 1, line 28) - line 6 less line 9 1.153.000 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM IT SELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPO SE OTHER THAN EDUCATIONAL. © 2020 McGraw-Hill Education. < Required A Required B >
Transcribed Image Text:Required: a. Compute Cramer's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income. X Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income. (Any Expenses (Line 5) and Deductions (Line 8) that are not included under Depreciation, Charitable Contributions, and Travel and Entertainment should be combined in the corresponding line item "Other". Enter all amounts as positive. Enter your answers in whole dollars not in millions.) Show lessa Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions 1,000,000 O 7 Income recorded on books this year not included on 200,000 O 10,000 O 1 Net income (loss) per books 2 Federal income tax per books this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest 4 Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted 8 Deductions on this return not charged against book on this return (itemize): income this year (itemize): a Depreciation b Charitable contributions a Depreciation 75,000 O b Charitable contributions 18,000 X 75,000 75,000 c Travel and entertainment c Other (include all items) d Other (include all items) 6 Add lines 1 through 5 18,000 1,228.000 9 Add lines 7 and 8 10 Income (page 1, line 28) - line 6 less line 9 1.153.000 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM IT SELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPO SE OTHER THAN EDUCATIONAL. © 2020 McGraw-Hill Education. < Required A Required B >
Cramer Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Cramer's federal income tax expense per books was $200,000. Cramer's book income included $10,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. Cramer recognized $10,000 of capital losses this year and no capital gains. • Cramer recorded $8,000 of book expense for meals and $10,000 of book expense for entertainment costs. • Cramer's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. Required: a. Compute Cramer's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income. Complete this question by entering your answers in the tabs below. Required A Required B Compute Cramer's federal taxable income and regular tax liability. (Enter your answers in whole dollars not in millions.) Amount Taxable income Tax liability
Transcribed Image Text:Cramer Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Cramer's federal income tax expense per books was $200,000. Cramer's book income included $10,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. Cramer recognized $10,000 of capital losses this year and no capital gains. • Cramer recorded $8,000 of book expense for meals and $10,000 of book expense for entertainment costs. • Cramer's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. Required: a. Compute Cramer's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income. Complete this question by entering your answers in the tabs below. Required A Required B Compute Cramer's federal taxable income and regular tax liability. (Enter your answers in whole dollars not in millions.) Amount Taxable income Tax liability
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