Prepare a schedule starting with pretax financial income in 2017 and ending with
ID: 2555103 • Letter: P
Question
Prepare a schedule starting with pretax financial income in 2017 and ending with taxable income in 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Pretax financial income 727700
insurane expense 9500
bond interest revenue ?
pollution fines 4600
total ?
temporary differences
depreciation expense ?
installment sales ?
warranty expense 43300
taxable income 729000
The accounting records of Splish Inc. show the following data for 2017 (its first year of operations).1. Life insurance expense on officers was $9,500. 2. Equipment was acquired in early January for $311,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Splish used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $4,000. 4. Product warranties were estimated to be $53,700 in 2017. Actual repair and labor costs related to the warranties in 2017 were $10,400. The remainder is estimated to be paid evenly in 2018 and 2019. 5. Gross profit on an accrual basis was $100,000. For tax purposes, $79,000 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,600. 7. Pretax financial income was $727,700. The tax rate is 30%.
Prepare a schedule starting with pretax financial income in 2017 and ending with taxable income in 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Pretax financial income 727700
insurane expense 9500
bond interest revenue ?
pollution fines 4600
total ?
temporary differences
depreciation expense ?
installment sales ?
warranty expense 43300
taxable income 729000
Explanation / Answer
Pretax financial income 727,700
insurane expense 9,500
bond interest revenue (-$4,000)
pollution fines 4600
total $737,800
temporary differences
depreciation expense (-31,100)
*Calculation of Depreciation:
(311000/5) - (311000 * 30%)
installment sales (-21,000)
warranty expense 43,300
taxable income 718,900