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Supra Incorporated estimates total federal and state tax rates to be 40 percent. Expected annual pretax earnings from continuing operations are $1,205,000. Differences between tax
Supra Incorporated estimates total federal and state tax rates to be 40 percent. Expected annual pretax earnings from continuing operations are $1,205,000. Differences between tax income and financial statement income are expected to be the following:
Dividend exclusion for dividends received on the companys stock investments | $ 72,000 |
---|---|
Tax-exempt income received | 20,800 |
Premiums for life insurance on officers for which the company is the beneficiary | 12,300 |
A business tax credit of $40,300 should be available. Supras first-quarter pretax earnings is $184,000, which includes a loss from discontinued operations of $31,000 before any tax effect of that loss.
Required:
- Estimate Supras effective combined federal and state tax rate on income from continuing operations for the year.
- Prepare the entry to record the tax provision for the income from continuing operations for the first quarter.
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