The records for Ross Mississippi Tanning show this data for $2020$:

$$ Insurance proceeds to the firm $($due to the death of an insured executive$)$ was $$150,000.$ Life insurance premiums covering this executive for the year was $$6,000.$ In total, the firm covers five insured executives $($with the firm as the beneficiary$),$ with a insurance premium cost of $$30,000$ in total $($$$6,000$ each$).$

$$ The firm illegally exported some goods, resulting in a fine of $$18,000.$

$$ The firm received $$3,000$ in interest from corporate bonds, and $$1,500$ in interest from municipal bonds.

$$ The firm uses straight$-$line depreciation for book purposes. Depreciation has been $$50,000$ per year for the past four years. For tax purposes, depreciation has been:

o $2017$: $30,000$

o $2018$: $70,000$

o $2019$: $55,000$

o $2020$: $45,000$

$$ The firm paid $$10,000$ in rent during $2020.$ $$8,000$ was for rent during the current year, and $$2,000$ was a prepayment for the first quarter of $2021.$

$$ Pretax financial income is $$500,000.$ The tax rate is $30\%.$

$1.)$ Prepare the $$book$-$tax grid$($i$.$e$.,$ a schedule of the differences between with pretax financial income and taxable income$)$ for $2020.$

$2.)2.)$ Prepare the journal entry to record income taxes for $2020.$

$3.)3.)$ Compute the company's effective tax rate for $2020$

Answer rating: 100% (QA)

BookTax Grid for 2020 ItemBook Income Taxable Income Difference Insura... View the full answer