Solution-Prepare schedule starting with profit before tax

Prepare schedule starting with profit before tax

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Reference no: EM132594799

Question - The accounting records of November Inc. show the following data for 2018.

1. Equipment was acquired in early January for $400,000. Straight-line depreciation over a 8-year life is used, with no residual value. For tax purposes, a 20% rate is used to calculate capital allowance.

2. Product warranties were estimated to be $50,000 in 2018. Actual repair and labour costs related to the warranties in 2018 were $10,000. The remainder is to be paid evenly in 2019 and 2020.

3. Sales on accrual basis were $100,000. For tax purposes, $75,000 was recorded on the installment-sale method.

4. Fines incurred for pollution violations were $5000.

5. Entertainment expenses were $15,000, non-deductible for tax purposes.

6. Rent collected in advance on Jan 1, 2018, totaled RM60,000 for a 3-year period.

7. Profit before tax was $75,000, the tax rate is 25%.

Required -

1. Prepare schedule starting with Profit before tax in 2018 and ending with Taxable income in 2018.

2. Prepare the journal entry for 2018 to record income tax payable.

Reference no: EM132594799

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Prepare schedule starting with profit before tax

Reference no: EM132594799

Reference no: EM132594799

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