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Find what the total income tax expense to be reported

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At the end of 2020, its first year of operations, Ontario Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:

Pre-tax accounting income $ 300,000

Estimated lawsuit expense 750,000

Instalment sales profit (600,000)

Taxable income $450,000

Problem 1: The estimated lawsuit expense of $750,000 will be deductible in 2022 when it is expected to be paid. The instalment sales profit will be collected at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is

a. $90,000.

b. $135,000.

c. $150,000.

d. $300,000.

e.$225,000.

Reference no: EM132973190

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