Sol Limited. reported earnings of $550,000 in 20X8. The company has $95,000 of depreciation expense this year, and claimed CCAof $150,000. The tax rate was 28%. At the end of 20X7, there was a $130,000 loss carryforward that was not recorded because usewas considered less than probable. The company also reported a deferred tax liability of $75,000 caused by capital assets with a netbook value of $1,350,000 and UCC of $1,050,000. The tax rate had been 20% in 20X7.Required:What is the amount of income tax expense in 20X8?Tax expensePrepare the income tax entry or entries.AView transaction listNo12Date20X820X8View journal entry worksheetIncome tax expenseDeferred income tax assetIncome tax payableIncome tax payableIncome tax expenseGeneral JournalDebitCredit138,600

To calculate the income tax expense for 20X8, we need to follow these steps:Calculate the taxable…

Answered: Sol Limited. reported earnings of…

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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A chemical company has a total income of 1.62 million per year and total expenses of 716057 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of 1.24 with a MACRS recovery period of 7 years, and a straight-line recovery period of 9.4 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method?-
ces Petrilli Ltd. had a taxable loss of $4,500,000 in 20X8 and a further loss of $230,000 in 20X9. The tax rate in 20X8 was 32% and in 20X9, 33%. All rates are enacted in the year to which they pertain. In the three years before the losses, the company had the following taxable income and tax rates: Taxable income Tax rate 20X5 20X6 $1,584,000 $1,710,000 Refund amount $ 36% There are no temporary differences other than those created by income tax losses. The company was struggling due to a competitor entering the market. Required: 1. What is the amount of refund that will be claimed in 20X8? 0 38% 20X7 $689,600 40% The amount of the tax loss carryforward 2. What is the amount of the loss carryforward in 20X8? $4,500,000
During the current year, Dale Corporation sold a segment of its business at a gain of $315,000.Until it was sold, the segment had a current period operating loss of $112,500. The company had$1,275,000 from continuing operations for the current year.Prepare the lower part of the income statement, beginning with the $1,275,000 income fromcontinuing operations. Follow tax allocation procedures, assuming that all changes in incomeare subject to a 20% income tax rate. Disregard earnings per share disclosures. (Round all calculations to nearest dollar amount.)
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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
Li Corporation reported pretax book income of $605,000. Tax depreciation exceeded book depreciation by $401,000. Li's beginning book (tax) basis in its fixed assets was $1,905,000 ($1,704,000) and its ending book (tax) basis is $1,805,000 ($1,206,000). In addition, the company received $305,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $69,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Deferred income tax expense
At the beginning of 20x5, Rundle Ltd. reported a deferred tax liabilty of $300,000. The net book value of the capital assets was $2,600,000, while UCC was $1,600,000. In 20x5, depreciation was $400,000, while CCA was $625,000. The tax rate changed in 20x5 to be 35 %. What is the adjustment required to the deferred taxes?
In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $58,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 30%. 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 S Beginning retained earnings $446,000 20X5 $424,100 Earnings (includes error in 20x5) Dividends declared 83,800 61,300 94,200 2,300 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
During the year, Pharr Corporation had sales of $459,000. Costs were $388,000 and depreciation expense was $102,800. In addition, the company had an interest expense of $79.250 and a tax rate of 21 percent. What is the operating cash flow for the year? Ignore any tax loss carry-forward provisions. Multiple Choice $72,733 $77,768 O $15,071
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In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $68,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 35%. 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: Z0X6 Beginning retained earnings $456,000 zexs $432,500 Earnings (includes error in 20x5) Dividends declared 85,800 62,500 96,400 72,900 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) Answer is not complete. General Journal Debit Credit 136,000 23,800x 112,200x No 1 Date 20X6 Deferred income tax liability Retained earnings, error correction 2. Prepare the comparative retained earnings section of the statement of changes…

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