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For the year ended December 31, 2016, Fidelity Engineering reported pretax accounting income of $982,000. Selected information for 2016 from Fidelitys records follows: Interest income

For the year ended December 31, 2016, Fidelity Engineering reported pretax accounting income of $982,000. Selected information for 2016 from Fidelitys records follows:

Interest income on municipal bonds $ 33,000
Depreciation claimed on the 2016 tax return in excess of depreciation on the income statement 56,500
Carrying amount of depreciable assets in excess of their tax basis at year-end 87,500
Warranty expense reported on the income statement 26,750
Actual warranty expenditures in 2016 16,500

Fidelity's income tax rate is 40%. At January 1, 2016, Fidelity's records indicated balances of zero and $12,400 in its deferred tax asset and deferred tax liability accounts, respectively

Required:
1.

Determine the amounts necessary to record income taxes for 2016 and prepare the appropriate journal entry.

a)image text in transcribed

b) Record 2016 income taxes.

2.

What is Fidelitys 2016 net income?

Tax Rate % Tax $ Recorded as: Pretax accounting income Permanent difference $ 982.00 Income subject to taxation Temporary difference Taxable income (income tax return)

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