Michael Smith has provided you with the current years income statement for Palo Alto, Inc. In the attached spreadsheet, reconcile book income to taxable income. All information and notes available in pictures below
AutoSave Off He TAX4011 Book Income to Taxable income Reconciliation - Excel Search Shine wilson SW File Home Insert Draw Page Layout Formulas Data Review View Help Share Comments 11AA Insert Calibri == ab Wrap Text General AY O DX Delete Paste BIU MA y Es Merge & Center y $ %, 8-20 s Analyze Sensitivity Data Analysis Sensitivity Conditional Format as Cell Formatting Table Styles Styles Format Sort & Find & Filter Select Clipboard Font Alignment Number Cells Editing E10 X fx C D E F G H I J K L M N P Q R S T B Palo Alto, Inc. Income Statement Current Year Book Income Loss Book - Tax Adjustments (DR) Cr Taxable income $64,800,000 -45,600,000 $19,200,000 75,000 (1) 80,000 $19,355,000 1 2 3 4 5 6 Revenue from sales 7 Cost of Goods Sold 8 Gross profit 9 Other income: 10 Interest income 11 Miscellaneous income 12 Gross Income 13 Expenses: 14 Compensation 15 Stock option compensation 16 Advertising 17 Repairs and Maintenance 18 Rent 19 Bad debt expense 20 Depreciation 21 Warranty expenses 22 Meals and entertainment 23 Life insurance premiums 24 Federal income tax expense 25 Other expenses 26 Total Expenses 27 Net Income 28 Income Statement -9,630,000 (2) -350,000 (3) -1,950,000 -658,000 -857,000 -50,000 (4) -1,750,000 (5) -95,000 (6) -60,000 -25,000 (7) -1,250,000 -350,000 (8) -17,025,000 2,330,000 I o + 75% % 4:48 PM 2/21/2021 j Type here to search E Me Graw Hill AutoSave Off He TAX4011 Book Income to Taxable income Reconciliation - Excel Search Shine wilson SW File Home Insert Draw Page Layout Formulas Data Review View Help Share Comments Insert Calibri 11 AA == ab Wrap Text General AY O DX Delete WS Paste BIU Av y Es Merge & Center y $ % -28 s Analyze Sensitivity Data Analysis Sensitivity Conditional Format as Cell Formatting Table Styles Styles Format Sort & Find & Filter Select Editing Clipboard Font Alignment Number Cells E10 X fx B C D E F H H 1 K L M N 0 28 29 Notes (1) of the $75,000 interest income, $25,000 is from California State municipal bond. 30 31 32 33 (2) This includes total officer compensaiton of $2,950,000 (no one officer received more than $1,000,000 compensation). (3) This amount is the portion of incenctive stock option compensation that was expensed during the year (recepiants are officers). 34 35 (4) Palo Alto wrote off $35,000 of its accounts receivable as uncollectible. 36 37 38 39 (5) Tax depreciation for the year was $2,300,000. (6) In the current year, Palo Alto did not make any actual payments on warranties it provided to customers. (7) Premiums on key employee life insurance 40 41 42 43 44 45 (8) This includes $10,000 of Politial Contributions. Income Statement + + 92% j Type here to search O E MC Graw Hill 4:47 PM 2/21/2021
