Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the end of 2020, its first year of operations, Ontario Corp. prepared the following reconciliation between pretax accounting income and taxable income: Pre-tax accounting

At the end of 2020, its first year of operations, Ontario Corp. prepared the following reconciliation between pretax accounting income and taxable income:

Pre-tax accounting income $ 300,000

Estimated lawsuit expense 750,000

Installment sales profit (600,000)

Taxable income $450,000

The estimated lawsuit expense of $750,000 will be deductible in 2022 when it is expected to be paid. The installment sales profit will be collected at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is:

a. $90,000.

b. $135,000.

c. $150,000.

d. $300,000.

e. $225,000.

Step by Step Solution

3.44 Rating (154 Votes )

There are 3 Steps involved in it

Step: 1

Option A 90000 Explanations In accounting for Income tax we are solving th... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones

10th Edition

324300980, 978-0324300987

More Books

Students also viewed these Accounting questions

Question

What functions are normally associated with the production cycle?

Answered: 1 week ago

Question

^&* What is an abnormal return?

Answered: 1 week ago