Broncos Co. reports pretax financial income of $70,000 for 20x1. The following items cause taxable income to be different than pretax financial income: Depreciation on the tax return is greater than depreciation on the income statement by $16,000. Rent collected on the tax return is greater than rent earned on the income statement by $22,000. Fines for pollution appear as an expense of $11,000 on the income statement. Interest income from City of Denver municipal bonds is $5,000. Broncos’ tax rate is 30% for all years and the company expects to report taxable income in all future years. a) Compute taxable income. b) Prepare the journal entry to record income tax expense, deferred income tax, and income tax payable for 20x1. c) Compute net income for 20x1.
Broncos Co. reports pretax financial income of $70,000 for 20x1. The following items
cause taxable income to be different than pretax financial income:
statement by $16,000.
Rent collected on the tax return is greater than rent earned on the income
statement by $22,000.
Fines for pollution appear as an expense of $11,000 on the income
statement.
Interest income from City of Denver municipal bonds is $5,000.
Broncos’ tax rate is 30% for all years and the company expects to report
taxable income in all future years.
a) Compute taxable income.
b) Prepare the
income tax, and income tax payable for 20x1.
c) Compute net income for 20x1.
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