Question

Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $440,000, which includes interest revenue of $44,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 Complete the following table given below to record income taxes in 2021. (Enter your answers in thousands (i.e., 5,500 should be entered as 5.5). Amounts to be deducted should be indicated with a minus sign.) Tax Rate % Tax $ Recorded as: Pretax accounting income Permanent difference Income subject to taxation Temporary difference Income taxable in current year $ $ $ $ $ 440 (44) 396 (10) 386 25% 25% 25% = $ $ $ 99 (2.5) 96.5 Income tax expense Deferred tax liability Income tax payable < Required 1 Calculation Required 1 GJ >
Please help with part 3

Answer 1

Calculation of Net Income:-

Pretax Accounting Income= $440,000

Less, Interest revenue from Municipal government bonds (Exempt)= $44,000

Less, Depreciation on Truck ($40,000*50%) $20,000

Net Income $376,000

Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $440,000, which includes interest revenue of $44,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 What is Southern Atlantic's 2021 net income? (Enter your answer in whole dollar.) Net income $ 341,000 440,000-44000-20000= 376,000 Required 1 GJ Required 2 >