Question
Review the following information for Acco Brands relating to the year 2018. 1. Income taxes of $270,000 are due for the 2018 tax year. The
Review the following information for Acco Brands relating to the year 2018.
1. Income taxes of $270,000 are due for the 2018 tax year. The tax rates are 30% for 2018 and 40% for 2019. 2. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $75,000. This difference will reverse in equal amounts of $25,000 over the years 2019 thru 2021. 3. Interest received on municipal bonds was $24,000 4. Advanced rent collected on January 1, 2018 totaled $45,000 for a 3 year period. Of this amount, $30,000 was reported unearned at December 31, 2018, for book purposes. 5. No deferred taxes existed at the beginning of 2018. A. Compute taxable income for 2018. B. Compute pretax financial income for 2018. C. Prepare journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2018 and 2019. Assume taxable income for 2019 was $760,000. D. Prepare the income tax expense section of the income statement for 2018, beginning with Income before income taxes.
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