Cramer Corporation, a calendar year, accrual basis corporation, reported $1.30 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 $206,000. • Cramer's book income included $16,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $7,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. • Cramer recognized $16,000 of capital losses this year and no capital gains. • Cramer recorded $11,000 of book expense for meals and $13,000 of book expense for entertainment costs. • Cramer's depreciation expense for book purposes totaled $406,000. MACRS depreciation was $475,000. Required: 1. Compute Cramer's federal taxable income and regular tax liability. 2. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income.

Cramer Corporation, a calendar year, accrual basis corporation, reported $1.30 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 $206,000. • Cramer's book income included $16,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $7,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. • Cramer recognized $16,000 of capital losses this year and no capital gains. • Cramer recorded $11,000 of book expense for meals and $13,000 of book expense for entertainment costs. • Cramer's depreciation expense for book purposes totaled $406,000. MACRS depreciation was $475,000. Required: 1. Compute Cramer's federal taxable income and regular tax liability. 2. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable income.

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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