Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hunter Company purchased a light truck on January 2, 2016 for $18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated

Hunter Company purchased a light truck on January 2, 2016 for $18,000. The truck, which will be used for deliveries, has the following characteristics:

Estimated life: 5 years

Estimated residual value: $3,000

Depreciation for financial statements: straight-line

Depreciation for income tax purposes: MACRS (3-year-life)

From 2016 through 2020, each year, Hunter had sales of $100,000, cost of goods sold of $60,000, and operating expenses (excluding depreciation) of $15,000. The truck was disposed of on December 31, 2020, for $2,000.

Required:

If required, round answers to the nearest dollar.

1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2016 through 2020.

If an amount is zero, enter "0".

HUNTER COMPANY
Income Statement: Pretax (partial)
For the years ended 2016 - 2020
2016 2017 2018 2019 2020
Sales $ $ $ $ $
Cost of goods sold
Gross profit $ $ $ $ $
Operating expenses
Depreciation expense
Loss on disposal
Pretax accounting income $ $ $ $ $

2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2016 through 2020. Refer MACRS Depreciation Schedule to answer the following question.

Round your answers to the nearest dollar. If an amount is zero, enter "0".

HUNTER COMPANY
Income Statement: Taxable income (partial)
For the years ended 2016 - 2020
2016 2017 2018 2019 2020
Sales $ $ $ $ $
Cost of goods sold
Gross profit $ $ $ $ $
Operating expenses
Depreciation expense
Gain on disposal
Taxable income $ $ $ $ $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Certified Internal Auditor CIA Practice Of Internal Auditing Part 2- 2019

Authors: Muhammad Zain

1st Edition

1093798459, 978-1093798456

More Books

Students also viewed these Accounting questions

Question

2. Outline the functions of nonverbal communication

Answered: 1 week ago