Regulation Simulation: AICPA (Tax)
Question1: Complete the following income statement. (please with the explanation)
Question 2: Calculate the M-1 adjustment for each account.
3 Income statement and Form 1120 1. Information on Thrill Corporation Depreciation : Straight-line method for book & tax purpose Cash dividend : $26,000 for 20X1 Corporation began business in May, 20x1 2. Income Tax Rate(Partial)-Corporations $ Taxable income But Not Over- $ 50,000 75,000 100,000 335,000 Over- 0 50,000 75,000 100,000 Tax is: Of the Amount Over- 15% $ 7,500 + 25% 50,000 13,750 + 34% 75,000 22,250+ 39% 100,000 0 $ US$ 940,000 420,000 80,000 3. Income and expense items Gross sales Cost of goods sold Dividend received from stock - 10% owned U.S. Corp Interest income (Interest on state bond of $8,000 is included) Salaries - Officers - Clericals Bad debt allowances 10,000 120,000 140,000 30,000 14,000 15,000 3,000 Taxes - State income tax - Payroll tax Premium on life insurance on key man, Corporation is beneficiary Interest expense - Business borrowings - Loan to purchase state bond Rental expense Employee benefit program Depreciation Utilities Organizational cost Charitable contribution to University Federal income tax provision 7,000 6,000 16,000 25,000 26,500 7,500 23,000 30,000 40,000 Required 1. Complete the following income statement Income Statement(US$) Book Tax Account Income: Sales Cost of goods sold Dividend income Interest income Deduction : Compensation of officers Salaries Bad debts Taxes Life insurance premium Interest expense Rental expense Employee benefit program Depreciation Utilities Organizational cost Charitable contribution Dividend received deduction Income before income tax Federal income tax Net income Required 2. Fill out Form 1120 page1, Schedule M-1 and Schedule M-2 3 Income statement and Form 1120 1. Information on Thrill Corporation Depreciation : Straight-line method for book & tax purpose Cash dividend : $26,000 for 20X1 Corporation began business in May, 20x1 2. Income Tax Rate(Partial)-Corporations $ Taxable income But Not Over- $ 50,000 75,000 100,000 335,000 Over- 0 50,000 75,000 100,000 Tax is: Of the Amount Over- 15% $ 7,500 + 25% 50,000 13,750 + 34% 75,000 22,250+ 39% 100,000 0 $ US$ 940,000 420,000 80,000 3. Income and expense items Gross sales Cost of goods sold Dividend received from stock - 10% owned U.S. Corp Interest income (Interest on state bond of $8,000 is included) Salaries - Officers - Clericals Bad debt allowances 10,000 120,000 140,000 30,000 14,000 15,000 3,000 Taxes - State income tax - Payroll tax Premium on life insurance on key man, Corporation is beneficiary Interest expense - Business borrowings - Loan to purchase state bond Rental expense Employee benefit program Depreciation Utilities Organizational cost Charitable contribution to University Federal income tax provision 7,000 6,000 16,000 25,000 26,500 7,500 23,000 30,000 40,000 Required 1. Complete the following income statement Income Statement(US$) Book Tax Account Income: Sales Cost of goods sold Dividend income Interest income Deduction : Compensation of officers Salaries Bad debts Taxes Life insurance premium Interest expense Rental expense Employee benefit program Depreciation Utilities Organizational cost Charitable contribution Dividend received deduction Income before income tax Federal income tax Net income Required 2. Fill out Form 1120 page1, Schedule M-1 and Schedule M-2
