Date Account Titles and Explanation Debit Credit Remmers Corporation Income Stat

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Date

Account Titles and Explanation

Debit

Credit

Remmers Corporation
Income Statement (Partial)
Year ended December 31, 2014

The following information is available for Remmers Corporation for 2014.
1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $121,600. This difference will reverse in equal amounts of $30,400 over the years 2015–2018. 2. Interest received on municipal bonds was $12,100. 3. Rent collected in advance on January 1, 2014, totaled $63,900 for a 3-year period. Of this amount, $42,600 was reported as unearned at December 31, 2014, for book purposes. 4. The tax rates are 40% for 2014 and 35% for 2015 and subsequent years. 5. Income taxes of $325,400 are due per the tax return for 2014. 6. No deferred taxes existed at the beginning of 2014.

Explanation / Answer

a)Taxable income for 2014 be "X"
0.4*x=325,400
x=$813,500

b)Taxable income =813,500
excess depreciation=121,600
municipal interest=12,100
unearned rent=(42,600)
Pretax financial income for 2014= 813500+!21600+12100-42600=$904,600

c)FOr 2014
Income Tax Expense
   ($325,400 + $42,560 – $14,910)       353,050
   Deferred Tax Asset ($42,600 X .35)       14,910
       Income Tax Payable ($813,500 X .40)           325,400
       Deferred Tax Liability ($121,600 X .35)           42,560

For 2015
Income Tax Expense
   ($346,290 + $7,455 – $10,640)       343,105
   Deerred Tax Liability [($121,600 ÷ 4) X .35]   10,640
       Income Tax Payable ($989,400 X .35)       346,290
       Deferred Tax Asset [($42,600 ÷ 2) X .35]   7,455

d)Income before income tax=904,600
incoem tax expense:

current =325,400
defered=42560-14910=$27,650
net income=904,600-325400-27650=$551,550

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