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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
see attached

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 >

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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