Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plansto use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deductionis 50% of cost in 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $520,000, which includes interestrevenue of $60,000 from municipal governmental bonds. The enacted tax rate is 25%.Assuming no differences between accounting income and taxable income other than those described above:Required:1. Complete the following table given below and prepare the journal entry to record income taxes in 2021.2. What is Southern Atlantic's 2021 net income?Complete this question by entering your answers in the tabs below.Required 1 Required 1 GJ Required 2CalculationPrepare the journal entry to record income taxes in 2021. (If no entry is required for a transaction/event, select "No journal entryrequired" in the first account field. Enter your answers in whole dollars.)View transaction listJournal entry worksheet< 1Record 2021 income taxes.Note: Enter debits before credits.Transaction1Record entryGeneral JournalClear entryDebitCreditView general journal>Complete this question by entering your answers in the tabs below.Required 1 Required 1 GJ Required 2CalculationWhat is Southern Atlantic's 2021 net income? (Enter your answer in whole dollar.)Net income< Required 1 GJRequired 2 > Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plansto use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deductionis 50% of cost in 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $520,000, which includes interestrevenue of $60,000 from municipal governmental bonds. The enacted tax rate is 25%.Assuming no differences between accounting income and taxable income other than those described above:Required:1. Complete the following table given below and prepare the journal entry to record income taxes in 2021.2. What is Southern Atlantic's 2021 net income?Complete this question by entering your answers in the tabs below.Required 1CalculationRequired 1 GJ Required 2Complete the following table given below to record income taxes in 2021. (Amounts to be deducted should be indicated with aminus sign. Enter your answers in whole dollars.)Pretax accounting incomePermanent differenceIncome subject to taxationTemporary differenceIncome taxable in current year$ 520,000$ 520,000 xX$ 520,000 xTax Rate %< Required 1 Calculation25%==Tax $$ 130,000Recorded as:Required 1 GJ >

Solution: Taxable income = Pretax income - Favorable permanent differences - Favorable temporary…

Southern Atlantic Distributors began operations in January 2021 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 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $520,000, which includes interest revenue of $60,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2

Southern Atlantic Distributors began operations in January 2021 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 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $520,000, which includes interest revenue of $60,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2

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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On December 31, 2023, Cheyenne Inc., a public company, borrowed $3 million at 11% payable annually to finance the construction of a new building. In 2024, the company made the following expenditures related to this building structure: March 1, $519,000; June 1, $630,000; July 1, $1.5 million (of which $412,000 was for the roof); December 1, $1.5 million (of which $728,000 was for the building HVAC). Additional information follows: 1. 2. 3. Other debt outstanding: $5-million, 10-year, 12% bond, dated December 31, 2016, with interest payable annually $1.5-million, six-year, 10% note, dated December 31, 2020, with interest payable annually The March 1, 2024 expenditure included land costs of $147,000. Interest revenue earned in 2024 on the unused idle construction loan amounted to $52,400. Determine the interest amount that could be capitalized in 2024 in relation to the building construction. (Do not round intermediate calculations. Round capitalization rate to 2 decimal places, e.g.…
Southern Atlantic Distributors began operations in January 2021 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 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $300,000, which includes interest revenue of $40,000 from municipal governmental bonds. The enacted tax rate is 25%.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 2021.2. What is Southern Atlantic’s 2021 net income?
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