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Prepare appropriate journal entry to record Baker income tax

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Reference no: EM132863836

Problem - On January 1, 2018, The Baker Company purchased major pieces of manufacturing equipment for a total of $480,000. Baker uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2020, the book value of the equipment was $288,000 and its tax basis was $195,000. At December 31, 2021, the book value of the equipment was $192,000 and its tax basis was $117,000. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $1,214,000.

Required -

1. Prepare the appropriate journal entry to record Baker's 2021 income taxes. Assume an income tax rate of 25%.

2. What is Baker's 2021 net income?

Reference no: EM132863836

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