Reference no: EM132925973

Question - For the year ended December 31, 2018, Mozart Engineering reported pretax accounting income of $977,000. Selected information for 2018 from Fidelity's records follows:

Air pollution fines (non-tax deductible) $12,000

Depreciation claimed on the 2018 tax return in excess of depreciation on the income statement 55,000

Warranty expense reported on the income statement 26,000

Actual warranty expenditures in 2018 for tax purposes 16,000

Mozart's income tax rate is 40%. At January 1, 2018, Mozart's records indicated balances of $10,000 and $12,000 in its deferred tax asset and deferred tax liability accounts, respectively.

Required -

1. Compute taxable income for 2018. Show your computations.

2. Prepare the journal entry for 2018?

3. What is Mozart's 2018 net income?