Heron Corporation, a calendar year, accrual basis taxpayer, provides the following information for the current year and asks you to prepare Schedule M-1. Net income per books (after-tax) $258,050 Taxable income 195,000 Federal income tax liability 40,950 Interest income from tax-exempt bonds 5,000 Interest paid on loan incurred to purchase tax-exempt bonds 2,000 Life insurance proceeds received as a result of death of Heron’s president 100,000 Premiums paid on policy on life of Heron’s president 4,500 Excess of capital losses over capital gains 2,000 Retained earnings at beginning of year 375,000 Cash dividends paid 90,000 Tax depreciation in excess of book depreciation 7,500
Heron Corporation, a calendar year, accrual basis taxpayer, provides the following information for the current year and asks you to prepare Schedule M-1. Net income per books (after-tax) $258,050 Taxable income 195,000 Federal income tax liability 40,950 Interest income from tax-exempt bonds 5,000 Interest paid on loan incurred to purchase tax-exempt bonds 2,000 Life insurance proceeds received as a result of death of Heron’s president 100,000 Premiums paid on policy on life of Heron’s president 4,500 Excess of capital losses over capital gains 2,000 Retained earnings at beginning of year 375,000 Cash dividends paid 90,000 Tax depreciation in excess of book depreciation 7,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Heron Corporation, a calendar year, accrual basis taxpayer, provides the following information for the current year and asks you to prepare Schedule M-1.
|
Net income per books (after-tax) |
$258,050 |
|
Taxable income |
195,000 |
|
Federal income tax liability |
40,950 |
|
Interest income from tax-exempt bonds |
5,000 |
|
Interest paid on loan incurred to purchase tax-exempt bonds |
2,000 |
|
Life insurance proceeds received as a result of death of Heron’s president |
100,000 |
|
Premiums paid on policy on life of Heron’s president |
4,500 |
|
Excess of capital losses over |
2,000 |
|
|
375,000 |
|
Cash dividends paid |
90,000 |
|
Tax |
7,500 |
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