Prepare the income tax expense section of the income

Reference no: EM13587547

Part II: Goody Inc. has no deferred tax asset or liability prior to 2010. Its pretax financial income for 2010 and 2011 is: 2010 $750,000 2011 920,000 The following items caused the only differences between pretax fmancial income and taxable income.

1. In Jan. 1, 2010, the company pays at once $48,000 of 3 years rent through 2012 for a leased warehouse.

2. The company pays, for environmental problems, $30,000 fine in 2010 and $35,000 fine in 2011.

3. The company receives $25,000 from its investment in municipal bonds in 2011.

4. In 2011, the company terminated a top executive and agreed to $510,000 of severance pay. The amount will be paid evenly per year from 2011-2013. The 2011 payment was made. The total severance pay was expensed in 2011. The enacted tax rates existing at December 31, 2010 are:

2010 30%

2011 40%

2012 45%

2013 50%

INSTRUCTIONS:

(a) Determine taxable income for 2010 and 2011.

(b) Prepare the journal entry to record income taxes for 2010 and 2011.

(c) Prepare the income tax expense section of the income statement for the year ended December 31, 2010 & 2011. (d) Show how the deferred income taxes should be reported on the balance sheet at Dec. 31, 2011.

Reference no: EM13587547

Questions Cloud

Comet company began operations in 2010 and adopted the fifo : comet company began operations in 2010 and adopted the fifo method of inventory pricing. during 2012 comet company

Explain what is meant by indicator organisms when testing a : explain what is meant by indicator organisms when testing a water sample. what are the media used to determine the

At the beginning of its 2010 calendar-year accounting : at the beginning of its 2010 calendar-year accounting period abc inc. had retained earning of 1500000. during 2010 abc

What is the partial pressure of nitrogen in a container : what is the partial pressure of nitrogen in a container that contains 3.96mol of oxygen 7.49 mol of nitrogen and 1.19

Prepare the income tax expense section of the income : part ii goody inc. has no deferred tax asset or liability prior to 2010. its pretax financial income for 2010 and 2011

In the most probable number table what is the significance : in the most probable number table what is the significance of the 95 confidence limits in relation to the mpn index100

Primo industries collected 104282 from customers in 2014 of : primo industries collected 104282 from customers in 2014. of the amount collected 24011 was from services performed in

What is the bacteriologic standard for potable water why is : what is the bacteriologic standard for potable water? why is bacteriologic analysis of water directed at recognition

Trifluoroiodomethane cf3-i undergoes free radical addition : question trifluoroiodomethane cf3-i undergoes free radical addition to alkenes. explain the fact that the free-radical

User Account

All Pages