Question
You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2019. The companys income statement
You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2019. The companys income statement for 2019 is provided below: (Leave no answer blank. Enter zero if applicable.)
Tulip City Flowers Inc. Statement of Operations at December 31, 2019
Net sales $ 20,000,000
Cost of sales 12,000,000
Gross profit $ 8,000,000
Compensation $ 500,000
Selling expenses 750,000
Depreciation and amortization 1,250,000
Other expenses 1,000,000
Total operating expenses $ 3,500,000
Income from operations $ 4,500,000
Interest and other income 25,000
Income before income taxes $ 4,525,000
You identified the following permanent differences:
Interest income from municipal bonds $ 10,000
Nondeductible stock compensation $ 5,000
Nondeductible fines $ 1,000
TCF prepared the following schedule of temporary differences from the beginning of the year to the end of the year:
Tulip City Flowers Inc. Temporary Difference Scheduling Template Taxable Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Accumulated depreciation $(1,050,000) $(500,000) $(5,500,000) $(1,155,000)
Deductible Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Allowance for bad debts $21,000 $10,000 $110,000 $23,100 Prepaid income 0 20,000 20,000 4,200
Deferred compensation 10,500 10,000 60,000 12,600
Accrued pension liabilities 105,000 100,000 600,000 126,000
Total $136,500 $140,000 $790,000 $165,900
Required: Compute TCFs current income tax expense or benefit for 2019.
Compute TCFs deferred income tax expense or benefit for 2019.
Prepare a reconciliation of TCFs total income tax provision with its hypothetical income tax expense of 21 percent in both dollars and rates.
HELLO I HAVE FOUND ALL ANSWERS EXCEPT FOR THE PERCENTAGE FOR MUNCIPLE BONDS. I HAVE TRIED DIVIDING -2100 BY 4,525,000 AND GOT -.000464088 AND IT IS SAYING INCORRECT.
a. Compute TCF's current income tax expense or benefit for 2019. b. Compute TCF's deferred income tax expense or benefit for 2019. a. b. Current income tax expense Total income tax provision $ $ 873,810 949,410 Prepare a reconciliation of TCF's total income tax provision with its hypothetical in and rates. (Round your percentage answers to 2 decimal places. Amounts to be d sign.) Reconciliation of Effective Tax Rate Dollars Percent % Tax provision before adjustments Interest from municipal bonds Nondeductible stock compensation $ $ $ $ $ 950,250 (2,100) 1,050 210 949,410 21.00 (0.00) 0.00 0.00 20.98 Nondeductible fines % % % Income tax provisionStep by Step Solution
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