1. Use the following information to complete the below Basic Information Company

Question

1. Use the following information to complete the below Basic Information Company Name Current Year Year Operations Began Pre-tax financial income Tax Rate 2018 Tax Rate Future Years Jansen Corp. 2018 2018 $200,000 40% Differences Between Income Statement and Tax Return Income Statement Tax Return Type Warranty Expenses Gross Profit on Construction Contract Depreciation Expense Fine Paid for Pollution Interest Revenue on Tax-Exempt Bonds (S4,000) Short-term 000$134,000 Short-term (S120,000) (S160,000) Long-term (S14,000) $184, SO Permanent $7,000 $3,000 $0 Permanent a. Use a table to calculate/ taxable income and income taxes payable for 2018

Explanation / Answer

Deffered tax Asset/laibility on consider the temporary differences in income statement and tax return . it does not consider the permanent effect.

Differences which effect and increases the tax return income are DTA i.e deffered tax asset and which decrease the tax return income are DTL.

3. current tax expense a/c- debit 52000
deffered tax expensea/c--debit 32000
to income tax payble 52000
to deffered tax laibility 32000

pre tax financial income 200000 add/less expenses/income as per income statement warranty expense 14000 gross profit on construction contract -184000 depriciation expense 120000 fine paid on pollution 7000 interest revenue on tax exempted bond 3000 add/less income/expense as per tax return warranty expense -4000 gross profit on construction contract 134000 depriciation expense -160000 pre tax income as per tax return 130000 TAXABLE INCOME less tax@40% 52000 INCOME TAX PAYBLE after tax income 78000

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