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The records for Pharoah Co. show this data for 2021: ●   Gross profit on installment sales recorded on the books was $480,000. Gross profit from collections of installment receivables was $340,000. ●   Life insurance on officers was $4,400. ●   Machinery was acquired in January for $360,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Pharoah may deduct 14% for 2021. ●   Interest received on tax exempt Iowa State bonds was $9,600. ●   The estimated warranty liability related to 2021 sales was $22,200. Repair costs under warranties during 2021 were $14,200. The remainder will be incurred in 2022. ●   Pretax financial income is $660,000. The tax rate is 20%. (a)     Prepare a schedule starting with pretax financial income and compute taxable income. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

The records for Pharoah Co. show this data for 2021: ●   Gross profit on installment sales recorded on the books was $480,000. Gross profit from collections of installment receivables was $340,000. ●   Life insurance on officers was $4,400. ●   Machinery was acquired in January for $360,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Pharoah may deduct 14% for 2021. ●   Interest received on tax exempt Iowa State bonds was $9,600. ●   The estimated warranty liability related to 2021 sales was $22,200. Repair costs under warranties during 2021 were $14,200. The remainder will be incurred in 2022. ●   Pretax financial income is $660,000. The tax rate is 20%. (a)     Prepare a schedule starting with pretax financial income and compute taxable income. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

FINANCIAL ACCOUNTING
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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The records for Pharoah Co. show this data for 2021:

●   Gross profit on installment sales recorded on the books was $480,000. Gross profit from collections of installment receivables was $340,000.
●   Life insurance on officers was $4,400.
●   Machinery was acquired in January for $360,000. Straight-line depreciation over a ten-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Pharoah may deduct 14% for 2021.
●   Interest received on tax exempt Iowa State bonds was $9,600.
●   The estimated warranty liability related to 2021 sales was $22,200. Repair costs under warranties during 2021 were $14,200. The remainder will be incurred in 2022.
●   Pretax financial income is $660,000. The tax rate is 20%.

(a)

 
 
Prepare a schedule starting with pretax financial income and compute taxable income. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Schedule of Pretax Financial Income
and Taxable Income for 2021
                                                                         
$ 
                                                                           
                                                                       
  
 
                                                                       
  
 
     
                                                                           
                                                                       
  
 
                                                                       
  
 
                                                                       
  
 
                                                                         
$ 
 
 
 
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(b)

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