ACC 460 PROBLEM 3 C CORPORATION BOOK-TO-TAX RECONCILIATION.

Rambler Corporation, an accrual basis, calendar-year C corporation, began operations on January 2, 2010. For each item below, determine the 2018 Schedule M-1 adjustment to reconcile book income to taxable income, i.e., the amount and the effect ( + or -).

Net income per books $850,000

Provision for Federal income taxes, $255,000

Municipal bond interest, $16,000

During 2018, Rambler increased its allowance for uncollectible accounts by $30,000; actual bad debts written off in 2018 were $36,000.

Rambler reported depreciation for financial purposes of $125,000; MACRS, & 179 for the year was $170,000

Rambler acquired another corporation in 2015, paying $450,000 for goodwill. Rambler recorded a goodwill impairment loss of $100,000 for financial purposes in 2018.

In December 2017, Rambler received $25,000 as an advance payment for an order from a customer. Rambler reported the $25,000 as a liability (unearned income) on its balance sheet at 12/31/17 and as earned income in 2018.

In December 2018, Rambler received $40,000 as an advance payment for an order from a customer. Rambler reported the $40,000 as a liability (unearned income) on its balance sheet at 12/31/18.

Rambler reported gains of $22,000 and losses of $26,000 from the sale of investments in its Other Revenues & Expenses section of its income statement.

Rambler received dividend income from 25%-owned corporations totaling $40,000.

In May 2018, Rambler paid a $10,000 fine to a local government for violating a local ordinance.

Taxable Income