11 A reconciliation of Gisel Company's pretax accounting income with its taxable income for 2020, its first year of operations, is as follows:

Pretax accounting income 3,000,000

Excess tax depreciation (90,000)

Taxable income 2,910,000

The excess tax depreciation will result in equal net taxable amounts in each of the next three years. Enacted tax rates are 40% in 2020, 35% in 2021 and 2022, and 30% in 2023. The total deferred tax liability to be reported on Gisel's statement of financial position at December 31, 2020, is

a. 36,000 b. 30,000 c. 31,500 d. 27,000

12. John Corporation's partial income statement after its first year of operations is as follows:

Income before income taxes 3,750,000

Income tax expense

Current 1,035,000

Deferred 90,000 1,125,000

Net income 2,625,000

John uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was 1,500,000. No other differences existed between book income and taxable income except for the amount of depreciation. Assuming a 30% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year?

a. 1,200,000 b. 1,425,000 c. 1,500,000 d. 1,800,000

13. Paul Company made the following journal entry in late 2020 for rent on property it leases to Danford Corporation.

Cash 60,000

Unearned Rent 60,000

The payment represents rent for the years 2021 and 2022, the period covered by the lease. Paul Company is a cash basis taxpayer. Paul has income tax payable of 92,000 at the end of 2020, and its tax rate is 35%.

13.1 What amount of income tax expense should Paul Company report at the end of 2020?

a. 53,000 b. 71,000 c. 81,500 d. 113,000

13.2Assuming the taxes payable at the end of 2021 is 102,000, what amount of income tax expense would Paul

Company record for 2021?

a. 81,000 b. 91,500 c. 112,500 d. 123,000

14. Paul, Inc. had pre-tax accounting income of 900,000 and a tax rate of 40% in 2020, its first year of operations. During 2020 the company had the following transactions:

Received rent from Jane, Co. for 2021

32,000

Government bonds interest income

40,000

Depreciation for tax purposes in excess of book depreciation

20,000

Installment sales revenue to be collected in 2021

54,000

14.1 For 2020, what is the amount of income taxes payable for Paul, Inc.?

a. 301,600 b. 327,200 c. 343,200 d. 386,400

142.At the end of 2020, which of the following deferred tax accounts and balances is reported on Paul, Inc.'s statement of financial position?

Account_ Balance

a. Deferred tax asset 12,800

b. Deferred tax liability 12,800

c. Deferred tax asset 20,800

d. Deferred tax liability 20,800