SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT SHOW LIST OF ACCOUN
ID: 341315 • Letter: S
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SHOW LIST OF ACCOUNTS
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SHOW LIST OF ACCOUNTS
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Date
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
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The following information is available for Coronado Corporation for 2017.1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $124,000. This difference will reverse in equal amounts of $31,000 over the years 2018–2021. 2. Interest received on municipal bonds was $9,600. 3. Rent collected in advance on January 1, 2017, totaled $59,700 for a 3-year period. Of this amount, $39,800 was reported as unearned at December 31, 2017, for book purposes. 4. The tax rates are 40% for 2017 and 35% for 2018 and subsequent years. 5. Income taxes of $333,000 are due per the tax return for 2017. 6. No deferred taxes existed at the beginning of 2017.
Explanation / Answer
Taxable income for 2017 = $832500
Explanation;
Taxable income for 2017 will be calculated as follow;
Income taxes for 2017 = $333000
Tax rate = 40%
So taxable income will be ($333000 / 0.40) = $832500
Pretax financial income for 2017 = $926300
Explanation;
Pretax financial income for 2017 will be calculated as follow;
Taxable income for 2017
$832500
Excess depreciation
$124000
Municipal interest
$9600
Unearned rent
($39800)
Pretax financial income for 2017
$926300
Date
Accounts Titles & Explanation
Debit
Credit
2017
Income tax expense
$362470
Deferred tax asset ($39800 * 0.35)
$13930
Income tax payable ($832500 * 0.40)
$333000
Deferred tax liability ($124000 *0.35)
$43400
(For recording income tax expense, deferred income taxes, and income taxes payable)
2018
Income tax expense
$368165
Deferred tax liability ($31000 * 0.35)
$10850
Income tax payable ($1063000 * 0.35)
$372050
Deferred tax asset ($39800 / 2) *0.35
$6965
(For recording income tax expense, deferred income taxes, and income taxes payable)
Income Statement (Income tax expense section)
For the year 2017
Income before income tax
$926300
Less: Income tax expenses
Current
($333000)
Deferred ($43400 – $13930)
($29470)
Net income
$563830
Taxable income for 2017
$832500
Excess depreciation
$124000
Municipal interest
$9600
Unearned rent
($39800)
Pretax financial income for 2017
$926300
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