PART D

Swifty Company reports pretax financial income of $75,900 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 $15,200. Rent collected on the tax return is greater than rent recognized on the income statement by $22,100. 2. 3. Fines for pollution appear as an expense of $12,000 on the income statement. Swifty's 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. Swifty Company reports pretax financial income of $75,900 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 $15,200. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $22,100. Fines for pollution appear as an expense of $12,000 on the income statement. 3. Swifty's 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) Your answer is correct. Compute taxable income and income taxes payable for 2020. Taxable income A 94,800 Income taxes payable $ 28,440 Indicate what the income tax expense portion of the income statement for 2016 should look like. Assume all income (loss) relates to continuing operations. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45).) Splish Corporation Income Statement (Partial) For the Year Ended December 31, 2016 Operating Loss before Income Taxes $ (84,000) Income Tax Benefit Deferred 16,800 i Net Income /(Loss) $ (67,200) 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 eg. (45).) Swifty Company Income Statement (Partial) For the Year Ended December 31, 2020 Income before Income Taxes $ 75,900 Income Tax Expense Current Net Income /(Loss) $ 49,530 (d) Compute the effective income tax rate for 2020. (Round answer to 1 decimal places, e.g. 25.5%.) Effective income tax rate %