on April 2,2020 a corporation with a December 31 taxation year purchased a 3- year investment certificate for $20,000. the certificates pay interest only at the end of the 3 years term, but interest is compounded annually at the rate of 10%. currently, the corporation's marginal tax rate is 28%, however, in 2021 the marginal tax rate will decrease to 25%. AN INDIVIDUAL MAKES THE IDENTICAL INVESTMENT ON APRIL 1, 2020. THE INDIVIDUAL MARGINAL TAX RATE IS ALSO 28% IN 2020 AND IS EXPECTED TO DECREASE TO 25% IN 2021. REQUIRED : CALCULATE AND COMPARE THE TAX ON THE INTREST INCOME FOR THE 3 YEARS PERIOD FOR THE INDIVIDUAL AND CORPORATION,.

on April 2,2020 a corporation with a December 31 taxation year purchased a 3- year investment certificate for $20,000. the certificates pay interest only at the end of the 3 years term, but interest is compounded annually at the rate of 10%. currently, the corporation's marginal tax rate is 28%, however, in 2021 the marginal tax rate will decrease to 25%. AN INDIVIDUAL MAKES THE IDENTICAL INVESTMENT ON APRIL 1, 2020. THE INDIVIDUAL MARGINAL TAX RATE IS ALSO 28% IN 2020 AND IS EXPECTED TO DECREASE TO 25% IN 2021. REQUIRED : CALCULATE AND COMPARE THE TAX ON THE INTREST INCOME FOR THE 3 YEARS PERIOD FOR THE INDIVIDUAL AND CORPORATION,.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Since the SUTA rates change at the end of each year, the available 2023 rates were used for FUTA and SUTA. Note: For this textbook edition the rate 0.6% was used for the net FUTA tax rate for employers. Example 5-6 Park Company has a $70,000 federal and state taxable payroll and has earned a reduced state tax rate timely, the FUTA tax calculation is as follows: Gross FUTA tax ($70,000 x 0.060) Less 90% credit for state taxes paid late ($70,000 x 0.04 x 90%) $2,520 Less additional credit for state tax if rate were 5.4% [$70,000 x (0.054 - 0.04)] 980 Total credit Net FUTA tax If Park Company had made its SUTA payments before the due date of Form 940, the credit for the paym would have provided a total credit of $3,780 and a FUTA tax savings of $280. Peroni Company paid wages of $170,900 this year. Of this amount, $114,000 was taxable for net FUTA and SUTA purposes. The state's contribution tax rate is 3.1% for Peroni Company. Due to cash flow problems, the company did not make any SUTA…
Irving, Inc. pays its general manager an annual bonus of 6% of profit after deduction for both bonus and corporate income tax. For the year 2020, the company realized profit of ₱10,800,000 before said deductions. The income tax rate is 30%. What is the corporate income tax liability at December 31, 2020?
Hardev
A single person has taxable income of $85,000 per year. She earns $1,800 in interest from a certificate of deposit. How much federal income tax expense will be calculated on these earnings? Tax year 2019. Deduction amount 12,200. Tax rate 24%
Use the following information to calculate the federal average tax rate (ignore tax credits) for a taxpayer who earned $115,000 from employment, and where bonds were sold for $20,000 during the year that originally cost $10,000: Taxable income Up to $47,630 On the next $47,629 On the next $52,408 On the next $62,704 Over $210,371 Select one: Tax Rate 15% 20.5% Based on the above, the average tax rate (ATR) is closest to: a. 19.15% b. 19,45% c. 20.5% d. 26.0% 26% 29% 33%
Ashvin
You are provided the following transactions which occurred during the tax year which 31 December 2022 for Serowe Ltd. The company disposed some of its Heavy Plant and Machinery that it had bought on 30 November 2020 for P1,200,000. The company received P350,000. Serowe Ltd bought new Plant and Machinery to replace the disposed ones for P3,200,000. Assume that the company elects to apply rollover relief, calculate the capital allowances on the new plant and machinery for the current tax year.
J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2018. The only difference between accounting and taxable income is estimated product warranty costs for sales this year. Warrantypayments are expected to be in equal amounts over the next three years. Recent tax legislation will change thetax rate from the current 40% to 30% in 2020. Determine the amounts necessary to record J-Matt’s income taxesfor 2018 and prepare the appropriate journal entry.
Force Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $36,000 in 2021, $45,500 in 2022, and $50,000 in 2023. Force's pretax financial income for 2020 is $196,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020. 1. Compute taxable income and income taxes payable for 2020. 2. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020.
Iowa Corporation began operations in January 2021 and purchased an equipment for $60,000. Iowa uses straight-line depreciation over 4 years, for financial reporting purposes. For tax purposes, the equipment is fully depreciated in the year of purchase. Pretax accounting income for 2021 was $200,000, which includes interest revenue of $30,000 from municipal bonds. The enacted tax rate is 25% for all years. There are no other differences between accounting and taxable income. Required: a. Calculate taxable income in 2021. b. Prepare journal entry in 2021. c. Prepare journal entry assuming taxable income in 2022 is $180,000.
Delta Cron, the president of the VARIANT COMPANY, receives 15% of the net income (after deducting taxes but before bonuses) as a bonus arrangement with the company. For the current year, the net income after deducting the provision for income taxes and bonus is P5,000,000 The bonus is not deductible for tax purposes, and the tax rate is 20% Compute the appropriate provision for income tax for the year.
Swifty Corporation recorded warranty accruals as at December 31, 2020 in the amount of $151,800. This reversing difference will cause deductible amounts of $50,300 in 2021, $36,000 in 2022, and $65,500 in 2023. No other reversing difference exists. Swifty’s accounting income for 2020 is $144,000 and $175,000 in each of 2021 and 2022 and the tax rate is 25%. There are no deferred tax accounts at the beginning of 2020. Swifty Corporation was informed on December 31, 2021 that the enacted rate for 2022 and subsequent years is 28%. Calculate the deferred tax balances at December 31, 2021, and 2022. 2021 2022 Deferred tax asset $ $ eTextbook and Media List of Accounts Calculate taxable income and income tax payable for 2021 and 2022. 2021 2022 Taxable income $ $ Income tax payable $ $