Stone Co. reported $225,000 in income before income taxes for 2017. Stone's 2017 book depreciation exceeded its tax depreciation by $25,000 due to partial reversal of accelerated depreciation in a previous year. Stone also accrued $20,000 of estimated warranty expenses on 12/31/17. Stone's tax rate for 2017 (and previous years) was 40%, and the enacted rate for years after 2017 is 35%. In its 2017 income statement, what amount of should Stone report for Income Tax Expense? Select one: a. $98,000 b. $90,000 c. $91,000 d. $108,000 e. $101,000

Stone Co. reported $225,000 in income before income taxes for 2017. Stone's 2017 book depreciation exceeded its tax depreciation by $25,000 due to partial reversal of accelerated depreciation in a previous year. Stone also accrued $20,000 of estimated warranty expenses on 12/31/17. Stone's tax rate for 2017 (and previous years) was 40%, and the enacted rate for years after 2017 is 35%. In its 2017 income statement, what amount of should Stone report for Income Tax Expense? Select one: a. $98,000 b. $90,000 c. $91,000 d. $108,000 e. $101,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Lewes Company appropriately uses the installment sales method for tax purposes and the accrual method for revenue recognition for accounting purposes. Pertinent data at December 31, 2016, the close of the first year of operations, are as follows: Revenue Recognized Revenue Recognized Customer for Accounting Purposes for Tax Purposes Lowe's Builders $200,000 $100,000 Top Down Plumbing 500,000 350,000 Glass Plus Windows 600,000 350,000 Lewes's tax rate is 30%. What amount should be included in the deferred tax account at December 31, 2016 for these installment sales?
Hoover Property and Casualty Insurance Corporation reported a net operating loss of $110,000 for financial reporting and tax purposes in 2019. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Hoover's first two years of operation were as follows: \table [[2017, $50,000, 30%
At the beginning of 2016, Norris Company had a deferred tax liability of $6,600, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2015 and 2016, but in 2015 Congress enacted a 39% tax rate for 2017 and future years. Norris’s accounting records show the following pretax items of financial income for 2016: income from continuing operations, $120,300 (revenues of $351,500 and expenses of $231,200); gain on disposal of Division F, $24,000; loss from operations of discontinued Division F, $11,500; and prior period adjustment, $14,100, due to an error that understated revenue in 2015. All of these items are taxable; however, financial depreciation for 2016 on assets related to continuing operations exceeds tax depreciation by $4,600. Norris had a retained earnings balance of $161,300 on January 1, 2016, and declared and paid cash dividends of $32,800 during 2016. Required: 1.…
During 2018, Raines Umbrella Corporation had sales of $738,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $562,000, $99,000, and $133,000, respectively. In addition, the company had an interest expense of $104,000 and a tax rate of 30 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corporation paid out $17,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt? Multiple Choice O $77,450 O $44,000 O $94,000 $0 O $19,500
In 2018, Kardashian Inc. reported pretax accounting income of $240,000. In 2019, the company had a profit of $120,000. In 2020, the company lost $560,000. The following year, the company's accounting income was $440,000. Income for tax purposes was the same as for accounting for all years. Kardashian's tax rate was 32% for 2018 and 2019, 33% for 2020, and 34% for 2021 and subsequent years. The tax rates were all enacted by the beginning of 2018. REQUIRED: Prepare the journal entries for the years 2018 to 2021 to record income taxes. Assume that Kardashian's policy is to carry back any tax losses first, and that at the end of 2021, the loss carryforward benefits are judged more likely than not to be realized in the future.
Gallo Light began operations in 2018. The company sometimes sells used warehouses on an installment basis. In those cases, Gallo Light reports income in its income statement in the year of the sale. In its income tax return, though, Gallo Light reports installment income by the installment method. Installment income in 2018 was $90,000, which Gallo Light expects to collect equally over the next three years. The tax rate is 30%, but based on an enacted law, is scheduled to become 35% in 2020. Gallo Light's pretax accounting income from the 2018 income statement was $830,000, which includes $40,000 of interest revenue from an investment in municipal bonds. There were no differences between accounting income and taxable income other than those described above.Required:(1.) Prepare the appropriate journal entry to record Gallo Light's 2018 income taxes. Show calculations.(2.) What is Gallo Light's 2018 net income?
Lee Company’s current income taxes payable related toits taxable income for 2017 is $320,000. In addition, Lee’sdeferred tax liability increased $40,000 and its deferredtax asset increased $10,000 during 2017. What is Lee’sincome tax expense for 2017?
The whole question is as follows: At the beginning of 2016, Norris Company had a deferred tax liability of $6,600, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2015 and 2016, but in 2015 Congress enacted a 39% tax rate for 2017 and future years. Norris’s accounting records show the following pretax items of financial income for 2016: income from continuing operations, $120,300 (revenues of $351,500 and expenses of $231,200); gain on disposal of Division F, $24,000; loss from operations of discontinued Division F, $11,500; and prior period adjustment, $14,100, due to an error that understated revenue in 2015. All of these items are taxable; however, financial depreciation for 2016 on assets related to continuing operations exceeds tax depreciation by $4,600. Norris had a retained earnings balance of $161,300 on January 1, 2016, and declared and paid cash dividends of $32,800…
During 2018, Raines Umbrella Corporation had sales of $749,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $576,000, $101,000, and $131,000, respectively. In addition, the company had an interest expense of $99,000 and a tax rate of 40 percent. (Ignore any tax loss carryback or carryforward provisions.) Assume Raines Umbrella Corporation paid out $16,000 in cash dividends. If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what is the firm's net new long-term debt?
At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of $650,000. The company had extra depreciation taken for tax purposes in the amount of $975,000. Estimated expenses that were deducted for financial income but not yet paid amounted to $425,000. It is estimated that the expenses will be paid in 2022. The tax rate for all years is 25% Which of the following items are included in the journal entry at the end of the year? Question 13 options: a) credit deferred tax liability by $106,250. b) debit Income Tax Expense by $162,500 c) debit Deferred Tax Asset by 243,750. d) credit to Income Tax Payable account by $100,000.
Foster Company reported pretax financial income of $350,000 for 2021. Foster uses an accelerated form of depreciation for tax purposes, and it exceeds book depreciation by $50,000. The tax rate for 2021 is 20%. Record the journal entry at the end of 2021, be sure to include calculations, as well as income tax expense, a deferred account, and income tax payable.
1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2017-2020. 2. Deferral, for book purposes, of $20,000 of rent received in advance. The rent will be recognized in 2017. 3. Pretax financial income, $300,000. 4. Tax rate for all years, 40%. Instructions (a) Compute taxable income for 2016. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016. (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming taxable income of $325,000.