Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Larkspur Company reports pretax financial income of $73,700 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation

Larkspur Company reports pretax financial income of $73,700 for 2020. The following items cause taxable income to be different than pretax financial income.

1.

Depreciation on the tax return is greater than depreciation on the income statement by $14,400.

2.

Rent collected on the tax return is greater than rent recognized on the income statement by $19,900.

3.

Fines for pollution appear as an expense of $11,400 on the income statement.

Larkspurs tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020.

A. Compute taxable income and income taxes payable for 2020.

B. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

C. Prepare the income tax expense section of the income statement for 2020, beginning with the line Income before income taxes.. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

D. Compute the effective income tax rate for 2020. (Round answer to 1 decimal places, e.g. 25.5.)

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

Performance Audit Report Property Assessment Division Department Of Revenue

Authors: Montana Legislature Office Of The L

1st Edition

1019260211, 978-1019260210

More Books

Students also viewed these Accounting questions