Description
This is an exam my Intermediate Accounting II class
The exam cover chapter 16-17-18 from the text book : Spicepand, Sepe, Nelson, Thomas: Intermediate Accounting: 8th Edition, McGraw-Hill Irwin
it has 4 questions .. answer them all .. answers MUST be correct in order to receive the exam credit
also NO COPY or PLAGIARIZED work .. this is an exam and it will not be excepted
must be your own work and words
See the file attached
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Explanation & Answer
Here you go....
1.
(10 points) North Dakota Corporation began operations in January 2015 and purchased a machine for $20,000.
North Dakota uses straight-line depreciation over a four-year period for financial reporting purposes. For tax
purposes, the deduction is 50% of cost in 2015, 30% in 2016, and 20% in 2017. Pretax accounting income for
2015 was $150,000, which includes interest revenue of $20,000 from municipal bonds. The enacted tax rate is
30% for all years. There are no other differences between accounting and taxable income.
Required:
Prepare a journal entry to record income taxes for the year 2015. Show well-labeled
computations for the amount of income tax payable and the change in the deferred tax account.
Income tax expense (to balance) A/C Dr. $ 39,000
To Deferred tax liability (change in deferred tax balance per below) A/C $ 1,500
To Income tax payable A/C $ 37,500
Particulars
2015
Accounting income
150000
Permanent diff – municipal bond
interest
-20000
Depreciation diff (20Kx50%) (20Kx25%)
-5000
Taxable income
125000
Enacted tax rate
30%
Tax payable currently
37500
Future taxable
Amount
5000
30%
Deferred tax liability (5K x 30%)
1500
Less: Beginning balance
0
Cha...