Read the requirements Book Accounting Records Additional Information

The following additional information applies.

Dividends were from Moon Corporation, a $30\%-$owned domestic corporation.

Interest revenue consists of interest on corporate bonds, $$5,000$; and municipal bonds,

$$5,000.$

The stock is a capital asset held for three years prior to sale.

Roy uses the specific writeoff method of accounting for bad debts.

Interest expense consists of $$11,200$ interest incurred on funds borrowed for working

capital and $$800$ interest on funds borrowed to purchase municipal bonds.

Roy paid all contributions in cash during the current year to State University.

Roy calculated depreciation per books using the straight$-$line method. For income

tax purposes, depreciation amounted to $$70,000.$

Other expenses include premiums of $$14,000$ on the key$-$person life insurance policy

covering Roy's president, who died in December.

Rocket has a $$8,000$ net operating loss $($NOL$)$ carryover from prior years. Requirements

a$.$ Complete the worksheet to reconcile Roy's book income with its taxable

income $($before special deductions$).$

b$.$ Prepare a tax provision reconciliation. Assume a $21\%$ corporate tax rate.

Requirement a$.$ Complete the worksheet to reconcile Roy's book income with its taxable income $($before special deductions$).$

enter a zero.$)$

Roy Corporation Reconciliation of Book Income to Taxable Income before Special Deductions

Roy Corporation Worksheet to Reconcile Book Income to Taxable Income before Special Deductions