Compute taxable income and income tax payable for 2011

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Reference no: EM13482721

The following information has been obtained for the GockerCorporation.

1. Prior to 2010, taxable income and pretax financial income were identical.
2. Pretax financial income is $1,700,000 in 2010 and $1,400,000 is 2011.
3. On Jan. 1, 2010, equipment costing $1,200,000 is purchased.It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting.
4. Interest of $60,000 was earned on tax-exempt municipal obligations in 2011.
5. Included in 2011 pretax financial income is anextraordinary gain of $200,000, which is fully taxable.
6. The tax rate is 35% for all periods.
7. Taxable income is expected in all future years.
a. Compute taxable income and income tax payable for2011.
b. Prepare the journal entry to record 2011 income taxexpense, income tax payable, and deferred taxes.
c. Prepare the bottom portion of Gocker's 2011 incomestatement, beginning with "Income before income taxes andextraordinary item"
d. Indicate how deferred taxes should be presented on theDecember 31, 2011, balance sheet.

Reference no: EM13482721

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