Denver Company, a calendar-year corporation, had the following actual income bef

Question

Denver Company, a calendar-year corporation, had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X8:

Denver's income tax expense in its interim income statement for the third quarter should be:

Multiple Choice

$126,000.

$68,400.

$62,400.

$54,000

Estimated Effective Income Before Annual Tax Rate at the Quarter Income Tax Expense End of Each Quarter First $ 100,000 30 % Second $ 140,000 24 % Third $ 180,000 30 %

Explanation / Answer

Solution:

Income tax expense in third quarter=

Income before income tax of third quarter x 30%

=$180,000 x30%

=$54,000

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