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Kappa Financials reported taxable income of $1,600,000. An audit found that $200,000 in tax-deductible employee training costs were not deducted, and $50,000 in non-deductible entertainment

Kappa Financials reported taxable income of $1,600,000. An audit found that $200,000 in tax-deductible employee training costs were not deducted, and $50,000 in non-deductible entertainment expenses were included in the calculations.

Requirement: Adjust the taxable income and calculate the correct tax liability assuming a corporate tax rate of 26%. Discuss the errors found.


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