Required information[The following information applies to the questions displayed below.]Last year, Cougar Corporation (CC) reported a net operating loss of $25,000. In the current year, CC expected its current-year tax liability to be $260,000, so it made four equal estimated tax payments of $65,000 each. Cougar closed its booksat the end of each quarter. The following schedule reports CC's taxable income at the end of each quarter:Quarter-EndFirstSecondThirdFourthCumulativeTaxable Income$ 300,000700,0001,000,0001,500,000CC's current-year tax liability on $1,500,000 of taxable income is $315,000.a. Does CC owe underpayment penalties on its estimated tax payments?

Answer:- Tax liability meaning:- A person's or an entity's tax liability is the total amount of…

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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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At the end of the year, the deferred tax asset account had a balance of $12 million attributable to a cumulative temporary difference of $30 million in a liability for estimated expenses. Taxable income is $35 million. No temporary differences existed at the beginning of the year, and the tax rate is 40%. Prepare the journal entry(s) to record income taxes assuming it is more likely than not that one-fourth of the deferred tax asset will not ultimately be realized.
vn.2 At the end of the year, the deferred tax asset account had a balance of $8 million attributable to a temporary difference of $32 million in a liability for estimated expenses. Taxable income is $88 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%.Prepare the journal entry(s) to record income taxes, assuming it is more likely than not that three-fourths of the deferred tax asset will not ultimately be realized.
During its first three years of operations a company reported pre-tax book income of $1,000,000 in year 1, ($1,800,000) in year 2, and $3,000,000 in year 3. The income tax rate applicable to each of the years was 40%. Assume that there weren’t any temporary differences and a valuation allowance was not necessary. What is the amount of the deferred tax asset reported in the year 2 year-end balance sheet if the company elected a loss carryback?
Wynn Farms reported a net operating loss of $270,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn's first four years of operation were as follows: 2017 $ 2018 2019 Taxable Income 2020 82,000 92,000 190,000 40,000 Tax Rates 30 % 30 40 Income Taxes Paid 45 $ 24,600 27,600 76,000 18,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and prepare the journal entry to recognize the income tax benefit of the net operating loss. 2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss. Please correct answer only wit explanation. Thank you so much!
Before considering a net operating loss carryforward of $75 million, Fama Corporation reported $110 million of pretax accounting and taxable income in the current year. The income tax rate for all previous years was 35%. On January 1 of the current year, a new tax law was enacted, reducing the rate to 25% effective immediately. Fama's income tax payable for the current year would be: Note: Round your answer to the nearest whole million. $65 million. $19 million. $12 million. $9 million.
In its first year of operations, Woodmount Corporation reported pretax accounting income of $580 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $300 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be increased under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be: Multiple Choice $90 million $120 million $100 million $105 million
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Lillian Farms reported a net operating loss of $240,000 for financial reporting and tax purposes in 2019. The enacted tax rate is 25 %. Taxable income, tax rates, and income taxes paid in Lillian's first two years of operation were as follows: 2017...$100,000...40% 2018...$60,000...25% Assume NOL is allowed to carryback for two years, the amount of net loss reported on the income statement for the year ended December 31, 2019 would be: a) $ (180,000). b) $(175,000). c) 9(165,000). d) $(155,000).
In its first year of operations, Seagate Tech reported pretax accounting income of $780 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $900 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be reduced under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation will be: Multiple Choice $315 million. $300 million. $270 million. $360 million.
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At the end of the year, the deferred tax asset account had a balance of $12 million attributable to a temporary difference of $48 million in a liability for estimated expenses. Taxable income is $68 million. No temporary differences existed at the beginning of the year, and the tax rate is 25% Prepare the journal entry(s) to record income taxes, assuming it is more likely than not that three-fourths of the deferred tax asset will not ultimately be realized. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 2 Record the income tax expense. Note: Enter debits before credits. Transaction General Journal Debit Credit
ZYX Inc has average gross receipts of $40 million per year over the last several years. In the current year, ZYX has $2,000,000 of taxable income before considering interest.ZYX has $150,000 of business interest income, S1, 200,000 of interest expense, and no floor plan financing. How much interest expense can ZYX deduct?

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