Reference no: EM132008240
Question - Given the following facts:
Income before income taxes (on the income statement) $500,000
Book depreciation (included in income before income taxes) $300,000
Tax depreciation $450,000
Bad debt expense (included in income before income taxes) $60,000
Accounts receivable written off this year $75,000
Product warranty expense (included in income before income taxes) $125,000
Cost of warranty claims satisfied this year $90,000
Rent income (included in income before income taxes) $60,000
Rent collected this year $75,000
State and local bond interest included in income before income taxes $35,000
Domestic production activities deduction for this year $40,000
Enacted income tax rate 35%
1. Compute the company's taxable income. Hint: Temporary book-to-tax differences are indicated with a T while permanent book-to-tax differences are indicated with a P.
2. Compute the company's income tax payable.
3. Compute the company's income tax expense.
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