Sol Limited. reported earnings of $410,000 in 20X8. The company has $81,000 of depreciation expense this year, and claimed CCA of $122,000. The tax rate was 30%. At the end of 20X7, there was a $102,000 loss carryforward that was not recorded because use was considered less than probable. The company also reported a deferred tax liability of $61,000 caused by capital assets with a net book value of $1,210,000 and UCC of $910,000. The tax rate had been 20% in 20X7. Required: What is the amount of income tax expense in 20X8? Prepare the income tax entry or entries. 1) Record the entry income tax expense 2) Record the entry loss carryforward.

Sol Limited. reported earnings of $410,000 in 20X8. The company has $81,000 of depreciation expense this year, and claimed CCA of $122,000. The tax rate was 30%. At the end of 20X7, there was a $102,000 loss carryforward that was not recorded because use was considered less than probable. The company also reported a deferred tax liability of $61,000 caused by capital assets with a net book value of $1,210,000 and UCC of $910,000. The tax rate had been 20% in 20X7. Required: What is the amount of income tax expense in 20X8? Prepare the income tax entry or entries. 1) Record the entry income tax expense 2) Record the entry loss carryforward.

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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(Working with the income statement) At the end of its third year of operations, the Sandifer Manufacturing Co. had $4,522,000 in revenues, $3,362,000 in cost of goods sold, $458,000 in operating expenses which included depreciation expense of $140,000, and a tax liability equal to 34 percent of the firm's taxable income. Sandifer Manufacturing Co. plans to reinvest $52,000 of its earnings back into the firm. What does this plan leave for the payment of a cash dividend to Sandifer's stockholders? Complete the income statement for Sandifer Manufacturing Co.: (Round to the nearest dollar.) Revenues = Less: Cost of Goods Sold = Less: Operating Expenses Less: Interest Expense Less: Income Taxes = = $ $ $ $ Equals: Gross Profit = ... Equals: Net Operating Income = 0 Equals: Earnings before Taxes Equals: Net Income = = $ GA GA $
Edwards Electronics recently reported $15,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 25%. How much was its net operating profit after taxes (NOPAT)? Select the correct answer. a. $6,324.00 b. $6,349.50 Oc$6,273.00 O d. $6,298.50 e. $6,375.00
In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $67,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 25%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. Additional Information: 20X6 20X5 Beginning retained earnings $454,000 $430,400 Earnings (includes error in 20X5) Dividends declared 85,400 95,900 62,200 72,300
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Grand Corporation reported pretax book income of $621,000. Tax depreciation exceeded book depreciation by $414,000. In addition, the company received $310,500 of tax-exempt municipal bond interest. The company’s prior-year tax return showed taxable income of $51,750. Compute the company's current income tax expense or benefit. (Leave no answer blank. Enter N/A or zero.) Current income tax N/A $0 Deferred income tax Expense ?
Broncos Co. reports pretax financial income of $70,000 for 20x1. The following items cause taxable income to be different than pretax financial income: Depreciation on the tax return is greater than depreciation on the income statement by $16,000. Rent collected on the tax return is greater than rent earned on the income statement by $22,000. Fines for pollution appear as an expense of $11,000 on the income statement. Interest income from City of Denver municipal bonds is $5,000.Broncos’ tax rate is 30% for all years and the company expects to report taxable income in all future years.a) Compute taxable income.b) Prepare the journal entry to record income tax expense, deferred income tax, and income tax payable for 20x1.c) Compute net income for 20x1.
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