the Accounting records of rhyme redwood corporation provide income statement dat

Question

the Accounting records of rhyme redwood corporation provide income statement data for 2012 Total revenue $940,000 Total Expenses 750,000 Income before tax 190,000 Total expenses include depreciation of $50,000 computed on the straight-line method. In calculating taxable income on the tax return, Rhyme Redwood uses the modified accelerated cost recovery systems (MACRS). MACRS depreciation was $80,000 for 2012. The corporate income tax rate is 34%. Requirements: 1. Compute taxable income for the year. For this computation, substitute MACRS depreciation in place of straight-line depreciation. 2. Journalize the corporation's income tax for 2012 3. Show how to report the two income tax liabilities on Rhyme's classified balance sheet.

Explanation / Answer

now income before tax = 190000 - 30000 = 160000 tax rate is 34% tax = 54400 Journalize.......................................debit....................credit Income tax expense............................54400 Cash........................................................................54400 income tax will be considered in expenses in assets side and it will reduce net income

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