{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-28T06:45:39-04:00", "answer_date": "2024-06-28 06:45:39", "is_docs_available": null, "is_excel_available": null, "is_pdf_available": null, "count_file_available": 0, "main_page": "student_question_view", "question_id": "4255030", "url": "\/study-help\/questions\/jk-bakery-is-expanding-following-the-successful-promotion-of-its-4255030", "question_creation_date_js": "2024-06-28T06:45:39-04:00", "question_creation_date": "Jun 28, 2024 06:45 AM", "meta_title": "[Solved] JK Bakery is expanding, following the suc | SolutionInn", "meta_description": "Answer of - JK Bakery is expanding, following the successful promotion of its new gluten-free, sugar-free cupcakes. The bakery rec | SolutionInn", "meta_keywords": "jk,bakery,expanding,successful,promotion,new,gluten-free,sugar-free,cupcakes,recently,invested,top---line", "question_title_h1": "JK Bakery is expanding, following the successful promotion of its new gluten-free, sugar-free cupcakes. The bakery recently invested in a new top-of-the-line commercial oven on", "question_title": "JK Bakery is expanding, following the successful promotion of its new gluten-free,", "question_title_for_js_snippet": "JK Bakery is expanding, following the successful promotion of its new gluten free, sugar free cupcakes The bakery recently invested in a new top of the line commercial oven on January 1, 2020 for $40,000 The oven has an estimated service life of four years and a salvage value of zero JK Bakery is now able to generate $50,000 of profit before taxes and depreciation on this new oven each year The IRS is allowing JK Bakery to accelerate the depreciation of the machine for tax purposes The depreciation rates, as a percentage of purchase price, used by the IRS are 33 percent in the first year, 44 percent in the second year, 15 percent in the third year and 8 percent in the fourth year Additional Information Oven depreciation is the only difference between JK Bakery 's taxable income and financial income The oven is depreciated using the straight line method for financial reporting JK Bakery 's tax rate is 25 Required a Write the journal entry used to record JK Bakery 's income tax expense in 2020 and 2021 What is JK Bakery 's effective tax rate each year b The Mayor of New York City is trying to help the city recover from the COVID 19 crisis (and also promote healthy lifestyles) Accordingly, businesses that sell healthy foods earn a tax credit that allows them to pay no taxes on $15,000 of profit JK Bakery received a letter notifying them that they qualify for this tax break Therefore, JK Bakery will never have to pay tax on this $15,000 Please answer part a again, only for 2020, using this new information c Ignore the information in part b for this requirement The government, in order to finance the huge deficit resulting from the stimulus package, decided to implement new tax practices common in Eastern Europe As a result, the new 2020 tax rule states that depreciation is no longer deductible for tax purposes JK Bakery will never be able to deduct any depreciation for tax purposes Please answer part a again, only for 2020, using this new information ", "question_description": "

JK Bakery <\/em>is expanding, following the successful promotion of its new gluten-free, sugar-free cupcakes. The bakery recently invested in a new top-of-the-line commercial oven on January 1, 2020 for $40,000. The oven has an estimated service life of four years and a salvage value of zero. JK Bakery <\/em>is now able to generate $50,000 of profit before taxes and depreciation <\/em>on this new oven each year.<\/p>

The IRS is allowing JK Bakery <\/em>to accelerate the depreciation of the machine for tax purposes. The depreciation rates, as a percentage of purchase price, used by the IRS are 33 percent in the first year, 44 percent in the second year, 15 percent in the third year and 8 percent in the fourth year.<\/p>

Additional Information:<\/p>

Oven depreciation is the only difference between JK Bakery<\/em>'s taxable income and financial income. The oven is depreciated using the straight-line method for financial reporting.<\/p>

JK Bakery<\/em>'s tax rate is 25%.<\/p>

<\/p>

Required:<\/p>

a.<\/strong>Write the journal entry used to record JK Bakery<\/em>'s income tax expense in 2020 and 2021. What is JK Bakery<\/em>'s effective tax rate each year?<\/p>

b.<\/strong>The Mayor of New York City is trying to help the city recover from the COVID-19 crisis (and also promote healthy lifestyles). Accordingly, businesses that sell healthy foods earn a tax credit that allows them to pay no taxes on $15,000 of profit. JK Bakery <\/em>received a letter notifying them that they qualify for this tax break. Therefore, JK Bakery <\/em>will never <\/em><\/strong>have to pay tax on this $15,000. Please answer part a <\/strong>again, only for 2020, using this new information.<\/p>

c.<\/strong>Ignore the information in part b <\/strong>for this requirement. The government, in order to finance the huge deficit resulting from the stimulus package, decided to implement new tax practices common in Eastern Europe. As a result, the new 2020 tax rule states that depreciation is no longer deductible for tax purposes. JK Bakery <\/em>will never <\/em><\/strong>be able to deduct any depreciation for tax purposes. Please answer part a <\/strong>again, only for 2020, using this new information.<\/p>", "transcribed_text": "", "related_book": { "title": "Auditing Cases An Active Learning Approach", "isbn": "0130674842, 978-0130674845", "edition": "2nd Edition", "authors": "Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/64ed8a8041add_6938.jpg", "uri": "\/textbooks\/abnormal-psychology-clinical-perspectives-on-psychological-disorders-1st-edition-9781266566899", "see_more_uri": "" }, "free_related_book": { "isbn": "0230111750", "uri": "\/textbooks\/the-local-alternative-decentralization-and-economic-development-2011th-edition-978-0230111752-278643", "name": "The Local Alternative Decentralization And Economic Development", "edition": "2011th Edition" }, "question_posted": "2024-06-28 06:45:39", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/blackstone-tools-produced-12000-electric-drills-during-20x0-expected-production", "description": "Blackstone Tools produced 12,000 electric drills during 20X0. Expected production was only 10,500 drills. 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