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Mathis Co. at the end of 2020 , its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:
Mathis Co. at the end of 2020 , its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: The estimated litigation expense of $3,000,000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1,200,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1,200,000 current and $1,200,000 noncurrent. The income tax rate is 20% for all years. The income tax expense is a. $240,000. b. $360,000. c. $400,000. d. $800,000
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