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The accounting records of Rose Video show the following data for the year 2010: Life insurance premiums for key employee life insurance policies totaled $20,000,
The accounting records of Rose Video show the following data for the year 2010: Life insurance premiums for key employee life insurance policies totaled $20,000, which are not tax deductible. The company purchased $250,000 of new equipment during the year. Depreciation expense for GAAP purposes was $50,000, while tax rules permitted the company to deduct 100% of the purchase price in the year of the purchase. Interest income totaled $25,000, of which $10,000 came from tax exempt (non-taxable) investments. The company received $850,000 in cash related to subscription services, but recognized only $775,000 of related revenues on its books. The payments for subscriptions are taxable when they are received. Pretax financial income in 2010 was $600,000. The statutory tax rate is 21%. . . B1. Prepare the journal entry for 2010 to record Income Tax Expense. Be sure to show your work for partial credit. B2. Construct the income tax section of the income statement. B3. For the year 2010, calculate Cat Corp's effective tax rate (ETR) and cash effective tax rate (Cash ETR)
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