Question
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started