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Problem 19-4 The accounting records of Shinault Inc. show the following data for 2017 (its first year of operations) 1. Life insurance expense on officers
Problem 19-4 The accounting records of Shinault Inc. show the following data for 2017 (its first year of operations) 1. Life insurance expense on officers was $9,000. 2. Equipment was acquired in early January for $300,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Shinault used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $4,000. 4. Product warranties were estimated to be $50,000 in 2017. Actual repair and labor costs related to the warranties in 2017 were $10,000. The remainder is estimated to be paid evenly in 2018 and 2019. 5. Gross profit on an accrual basis was $100,000. For tax purposes, $75,000 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,200. 7. Pretax financial income was $750,000. The tax rate is 30%
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