Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000.Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretaxaccounting income for 2018 was $300,000, which includes interest revenue of $40,000 from municipal bonds.The enacted tax rate is 40%.Required:Assuming no differences between accounting income and taxable income other than those described above:1. Prepare the journal entry to record income taxes in 2018.2. What is Southern Atlantic’s 2018 net income?
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000.
Southern Atlantic plans to use straight-line
accounting income for 2018 was $300,000, which includes interest revenue of $40,000 from municipal bonds.
The enacted tax rate is 40%.
Required:
Assuming no differences between accounting income and taxable income other than those described above:
1. Prepare the
2. What is Southern Atlantic’s 2018 net income?
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