For the year ended December 31, 2024, Fidelity Engineering reported pretax accounting income of $1,004,000. Selected information for 2024 from Fidelity’s records follows: Interest income on municipal governmental bonds $ 60,000 Depreciation claimed on the 2024 tax return in excess of depreciation on the income statement 84,000 Carrying amount of depreciable assets in excess of their tax basis at year-end 144,000 Warranty expense reported on the income statement 40,000 Actual warranty expenditures in 2024 30,000 Fidelity's income tax rate is 25%. At January 1, 2024, Fidelity's records indicated balances of zero and $15,000 in its deferred tax asset and deferred tax liability accounts, respectively. Determine the amounts necessary to record income taxes for 2024, and prepare the appropriate journal entry. What is Fidelity’s 2024 net income?
For the year ended December 31, 2024, Fidelity Engineering reported pretax accounting income of $1,004,000. Selected information for 2024 from Fidelity’s records follows: Interest income on municipal governmental bonds $ 60,000 Depreciation claimed on the 2024 tax return in excess of depreciation on the income statement 84,000 Carrying amount of depreciable assets in excess of their tax basis at year-end 144,000 Warranty expense reported on the income statement 40,000 Actual warranty expenditures in 2024 30,000 Fidelity's income tax rate is 25%. At January 1, 2024, Fidelity's records indicated balances of zero and $15,000 in its deferred tax asset and deferred tax liability accounts, respectively. Determine the amounts necessary to record income taxes for 2024, and prepare the appropriate journal entry. What is Fidelity’s 2024 net income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
100%
For the year ended December 31, 2024, Fidelity Engineering reported pretax accounting income of $1,004,000. Selected information for 2024 from Fidelity’s records follows:
| Interest income on municipal governmental bonds | $ 60,000 |
|---|---|
| 84,000 | |
| Carrying amount of depreciable assets in excess of their tax basis at year-end | 144,000 |
| Warranty expense reported on the income statement | 40,000 |
| Actual warranty expenditures in 2024 | 30,000 |
Fidelity's income tax rate is 25%. At January 1, 2024, Fidelity's records indicated balances of zero and $15,000 in its
- Determine the amounts necessary to record income taxes for 2024, and prepare the appropriate
journal entry . - What is Fidelity’s 2024 net income?
Transcribed Image Text:Record 2024 income taxes.
Note: Enter debits before credits.
Transaction
1
General Journal
Debit
Credit
Transcribed Image Text:Description
Pretax accounting income
Permanent difference
Interest on governmental bonds
Income subject to taxation
Temporary difference
Depreciation
Warranty expense
Taxable income (income tax return)
Amount
$ 1,004.0
$1,004.0
$ 10.0
$1,014.0
X
Tax Rate
25%
25% =
25%
25% =
=
$
EA
69
$
Tax
Recorded as:
251.0 Income tax expense
Deferred tax liability
Deferred tax asset
253.5 Income tax payable
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