I need answer to past a and b. For part answer according to the excel template.
Required
: A. Prepare a book / tax reconciliation worksheet for Rocket Corporation using the excel worksheet template that is present below for part a.
B. Prepare an effective tax rate reconciliation for Rocket Corporation using the excel worksheet template for part b as mentioned below.. Assume a 21% federal corporate income tax rate. Disregard state income tax expense.
Below is the excel template for part a
Template for part b
Converting Book Income to Taxable income. The following income and expense ac- counts appeared in the book accounting records of Rocket Corporation, an accrual basis taxpayer, for the current calendar year. Book Income Account Title Debit Credit Net sales $3,230,000 Dividends received 10,000 (1) Interest income 18,000 (2) Gain on sale of stock 9,000 (3) Key-person life insurance proceeds 100,000 Cost of goods sold $2,000,000 Salaries and wages 500,000 Bad debts 13,000 (4) Payroll taxes 62,000 Interest expense 12,000 (5) Charitable contributions 50,000 (6) Depreciation 70,000 (7) Other expenses 40,000 (8) Federal income taxes 108,465 Net income 511,535 Total $3,367,000 $3,367,000 The following additional information applies. 1. Dividends were from Star Corporation, a 30%-owned domestic corporation. 2. Interest revenue consists of interest on corporate bonds, $15,000; and municipal bonds, $3,000. 3. The stock is a capital asset held for three years prior to sale. 4. Rocket uses the specific writeoff method of accounting for bad debts. 5. Interest expense consists of $11,000 interest incurred on funds borrowed for working capital and $1,000 interest on funds borrowed to purchase municipal bonds. 6. Rocket paid all contributions in cash during the current year to State University. 7. Rocket calculated depreciation per books using the straight-line method. For income tax purposes, depreciation amounted to $95,000. 8. Other expenses include premiums of $5,000 on the key-person life insurance policy covering Rocket's president, who died in December. 9. Rocket has a $90,000 NOL carryover from prior years. Rocket Corporation Book / Tax Reconciliation Book Income M-1 Adj Taxable income Net Sales Cost of Goods Sold Gross Profit Other income Dividends received Interest income Gain on sale of stock Key person life insurance proceeds Total Income Expenses Salaries and wages Bad debts Payroll taxes Interest expense Charitable contributions Depreciation Other expenses Total Expenses Net Income before federal tax expense - - 19 Interest expense 20 Charitable contributions 21 Depreciation 22 Other expenses 23 Total Expenses 24 Net Income before federal tax expense 25 Income taxes 26 Federal tax expense 27 Taxable income before special deductio 28 Special Deductions 29 Net operating loss deduction 30 Dividends received deduction 31 Taxable income 32 Fed Tax Tax Rate Exp/(Benefit 21% 0 Net income before federal income taxe . Permanent differences: 21% 21% 21% Net income after pemanent difference - Temporary differences: 21% 21% 21% 21% 21% Taxable income $ Effective Tax Rate Reconciliation Statutory tax rate % 21.00% Total 21.00% Converting Book Income to Taxable income. The following income and expense ac- counts appeared in the book accounting records of Rocket Corporation, an accrual basis taxpayer, for the current calendar year. Book Income Account Title Debit Credit Net sales $3,230,000 Dividends received 10,000 (1) Interest income 18,000 (2) Gain on sale of stock 9,000 (3) Key-person life insurance proceeds 100,000 Cost of goods sold $2,000,000 Salaries and wages 500,000 Bad debts 13,000 (4) Payroll taxes 62,000 Interest expense 12,000 (5) Charitable contributions 50,000 (6) Depreciation 70,000 (7) Other expenses 40,000 (8) Federal income taxes 108,465 Net income 511,535 Total $3,367,000 $3,367,000 The following additional information applies. 1. Dividends were from Star Corporation, a 30%-owned domestic corporation. 2. Interest revenue consists of interest on corporate bonds, $15,000; and municipal bonds, $3,000. 3. The stock is a capital asset held for three years prior to sale. 4. Rocket uses the specific writeoff method of accounting for bad debts. 5. Interest expense consists of $11,000 interest incurred on funds borrowed for working capital and $1,000 interest on funds borrowed to purchase municipal bonds. 6. Rocket paid all contributions in cash during the current year to State University. 7. Rocket calculated depreciation per books using the straight-line method. For income tax purposes, depreciation amounted to $95,000. 8. Other expenses include premiums of $5,000 on the key-person life insurance policy covering Rocket's president, who died in December. 9. Rocket has a $90,000 NOL carryover from prior years. Rocket Corporation Book / Tax Reconciliation Book Income M-1 Adj Taxable income Net Sales Cost of Goods Sold Gross Profit Other income Dividends received Interest income Gain on sale of stock Key person life insurance proceeds Total Income Expenses Salaries and wages Bad debts Payroll taxes Interest expense Charitable contributions Depreciation Other expenses Total Expenses Net Income before federal tax expense - - 19 Interest expense 20 Charitable contributions 21 Depreciation 22 Other expenses 23 Total Expenses 24 Net Income before federal tax expense 25 Income taxes 26 Federal tax expense 27 Taxable income before special deductio 28 Special Deductions 29 Net operating loss deduction 30 Dividends received deduction 31 Taxable income 32 Fed Tax Tax Rate Exp/(Benefit 21% 0 Net income before federal income taxe . Permanent differences: 21% 21% 21% Net income after pemanent difference - Temporary differences: 21% 21% 21% 21% 21% Taxable income $ Effective Tax Rate Reconciliation Statutory tax rate % 21.00% Total 21.00%
