What was total income tax expense

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Reference no: EM132221001

Question - At the end of its first year of operations on December 31, 2018, the Hondo Company reported the following information for the year: (Assume any deferred tax assets are more likely than not to be realized).

Pretax income for financial reporting purposes	$360,000
Municipal bond interest revenue on State of Texas bonds	12,000
Warranty expense for financial reporting purposes Warranty repair costs during period	30,000 10,000
Excess of MACRS Depreciation for tax purposes above straight line for financial reporting purposes	36,000
Officer's life insurance premium expense	4,000
Sales with an accrual basis profit for 2018	50,000
Installment basis profit for tax reportable for 2018*	20,000
Fines for pollution violations	5,000
Subscription revenues received in advance of product delivery	15,000
The income tax rate for current and future years	30%

*Remainder reportable in 2019

Required:

a. Determine taxable income

b. Prepare the income tax journal entr(ies) for the company at the end of 2018 including both current and deferred taxes.

c. What was total income tax expense for 2018 and show how it would be presented in the income statement starting with income before taxes for financial reporting purposes.

Reference no: EM132221001

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