Question
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $100,000. Southern Atlantic plans to use straight-line depreciation over a four-year
Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $100,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 40% of cost in 2018, 30% in 2019, and 30% in 2020. Pretax accounting income for 2018 was $480,000, which includes interest revenue of $65,000 from municipal bonds. The enacted tax rate is 40%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2018. 2. What is Southern Atlantics 2018 net income?
Required 1 Calculation Required 1 G Required 2 $ Complete the following table given below to record income taxes in 2018. (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.) Tax Rate % Tax $ Recorded as: Pretax accounting income 480 Permanent difference (65) Income subject to taxation 415 40% $ 166 Income tax expense Temporary difference (15) x 40% (6) Deferred tax liability Income taxable in current year 400 40% 160 Income tax payable X 11 $ X 11 $ View transaction list View journal entry worksheet No Event General Journal Debit Credit 1 166,000 Income tax expense Income tax payable Deferred tax liability 160,000 6,000 What is Southern Atlantic's 2018 net income? (Enter your answer in thousands.) Net income $ 314,000Step by Step Solution
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