How was income tax calculated in adjustment e? The following accounting equation shows the beginning balances for
Question:
How was income tax calculated in adjustment e?
The following accounting equation shows the beginning balances for Morro Bay Enterprises, Inc. accounts at January 1, 20X4.The following transactions occurred for the company during 20X4. 1 Issued common stock $300 to investors 2 Purchased $8,300 of inventory on account from suppliers 3 Paid the wages accrued in the year. 4 Prepaid the current year and the next year's insurance, $6,300 5 Sales revenue during the period were $88,200 of which $12,600 was received in cash and the balance was charged on account by customers. 6 The cost of the inventory sold in 5. above was $15,300 7 Paid $6,400 wages during the current period to employees. 8 Paid some of the bills owed to the accounts payable suppliers $12,200 9 Paid off the notes payable and the interest payable from the prior year 10 Declared and paid $1,400 dividends to shareholders 11 Paid rent for the current period of $5,700 12 Paid other operating expenses for the current period of $4,600 13 Paid the IRS the income tax accrued in the prior year. 14 Purchased $14,300 of inventory on account from suppliers 15 Borrowed $25,000 from First Bank and signed a 1 year note at 8% annual interest rate. 16 Borrowed $23,000 from bond investors on bond contracts at year end. No interest will be due since the funds were borrowed at the end of the year. 17 Received $3,960 cash from accounts receivable customers paying their bills. Year end Adjustments: a Accrued $5,200 of wages at year end. b Half of the prepaid insurance has expired. c Record depreciation on the equipment bought the prior year. It has a 5 year life with no residual value d Accrue 3 months of interest on the notes payable principal of $25,000. e Accrue income tax at 30% on the income before income tax.