Ch. 16 Test ? eno meducation com hmtpx 10.00 points Brief Exercise 16-9 Calculat

Question

Ch. 16 Test ? eno meducation com hmtpx 10.00 points Brief Exercise 16-9 Calculate taxable Income [L016-1, 16-4] Shannon Polymers uses straight -ine depreciation for financial reporting purposes for equipment costing $840,000 and with an expected useful lide of 4 years and no residual value For tax purposes, the deduction 40%, 2016, 20%, and 10%s in those years Pretax accounting income the first year the equipment was used was $960,000, which includes interest revenue of $28,000 from municipal bonds Other than the two descnibed, there are no diffeences between accounting income and taxable income The enacted tax rate 35% Prepare the journal entry to record income taxes. (If no entry is required for a particular event, select No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the income tax expense. Sote: Enter debits before credits. Debit Record entry Char entry View general journal Ceneral Journal TOSHIBA 2 3 4 5 tab

Explanation / Answer

General Journal Debit Credit Income Tax Expense 372800 Deferred Tax Liability 322400 Income Tax Payable 50400 Explanation Current Year Future Taxable Amount Pretax accounting income 960000 Permanent difference: Municipal bond interest -28000 Temporary difference: Depreciation ((840000*40%-(840000/4)) -126000 126000 Taxable Income 806000 Enacted Tax rate 40% 40% Tax payable Currently 322400 Deferred tax liability 50400

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