Echo Corporation (the Company) maintains its books and records and prepares its outside financial statements on the accrual method. The Company qualifies for and files its income tax returns on the cash method. The Company does not do business in any state except Virginia and files as a C Corporation. The tax rate in Virginia is a flat 6%. The Company uses as calendar year end. The Company is not a personal service corporation. The Company's trial balance for 2021 follows. The Company is exempt from the business interest expense limitations of IRC section 163(j). Echo Corporation Trial Balance 12.31.21 Cash Accounts receivable Allowance for doubtful accounts Instalment note receivable Equipment Accumulated depreciation Accounts payable Common stock Retained earnings Sales Interest on instalment note receivable Depreciation Labor Materials Bad debt expense Fines and penalties Interest expense Federal taxes State income tax expense Debit 75,000 185,000 0 795,000 15,000 150,000 450,000 2,500 250 4,500 7,500 1,500 1,686,250 Credit 3,700 795,000 14,000 2,500 85,300 785,000 750 1,686,250
Echo Corporation (the Company) maintains its books and records and prepares its outside financial statements on the accrual method. The Company qualifies for and files its income tax returns on the cash method. The Company does not do business in any state except Virginia and files as a C Corporation. The tax rate in Virginia is a flat 6%. The Company uses as calendar year end. The Company is not a personal service corporation. The Company's trial balance for 2021 follows. The Company is exempt from the business interest expense limitations of IRC section 163(j). Echo Corporation Trial Balance 12.31.21 Cash Accounts receivable Allowance for doubtful accounts Instalment note receivable Equipment Accumulated depreciation Accounts payable Common stock Retained earnings Sales Interest on instalment note receivable Depreciation Labor Materials Bad debt expense Fines and penalties Interest expense Federal taxes State income tax expense Debit 75,000 185,000 0 795,000 15,000 150,000 450,000 2,500 250 4,500 7,500 1,500 1,686,250 Credit 3,700 795,000 14,000 2,500 85,300 785,000 750 1,686,250
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Required:
3. Compute the balance due with the Company's 2021 federal
return and its 2021 state return.
4. Prepare the necessary journal entry to record the Company's current income tax expense based upon the
amounts computed in requirements 2 and 3.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education