Western Corporation, a calendar year, accrual basis corporation, reported $500,000 of net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s books and records reveal the following information: Western’s book income included $15,000 of dividends, received from a domestic corporation in which Western owns less than 1 percent of the outstanding stock.Western’s depreciation expense per books was $55,000, and its MACRS depreciation was $70,000.Western earned $5,000 of interest from municipal bonds and $6,000 of interest from corporate bonds.Western’s capital losses exceeded its capital gains by $2,000.Western’s federal income tax expense per books was $103,000.Compute Western’s federal taxable income and regular tax liability. My Solutions: federal taxable income = $585,500, regular tax liability = $122,955(This is a past homework problem that I got wrong. Could you please explain how to do this, I do not understand what I did wrong.)

Taxable income refers to the portion of the gross income which IRS subject to the taxes and it…

Answered: Western Corporation, a calendar year,…

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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Western Corporation, a calendar year, accrual basis corporation, reported $500,000 of net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s books and records reveal the following information:

Western’s book income included $15,000 of dividends, received from a domestic corporation in which Western owns less than 1 percent of the outstanding stock.
Western’s depreciation expense per books was $55,000, and its MACRS depreciation was $70,000.
Western earned $5,000 of interest from municipal bonds and $6,000 of interest from corporate bonds.
Western’s capital losses exceeded its capital gains by $2,000.
Western’s federal income tax expense per books was $103,000.

Compute Western’s federal taxable income and regular tax liability.

My Solutions: federal taxable income = $585,500, regular tax liability = $122,955

(This is a past homework problem that I got wrong. Could you please explain how to do this, I do not understand what I did wrong.)

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