Question

Based on the book income to taxable income reconciliation you completed use the attached spreadsheet to complete Palo Alto’s Schedule M-1.

Palo Alto, Inc. Income Statement Current Year Book - Tax Adjustments (DR) Book Income/(Loss) $64,800,000 -45,600,000 $19,200,000 Taxable income $64,800,000 -45,600,000 $19,200,000 $25,000 75,000 (1) 80,000 $19,355,000 $50,000 80,000 19,330,000 9,630,000 -350,000 Revenue from sales Cost of Goods Sold Gross profit Other income: Interest income Miscellaneous income Gross Income Expenses: Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad debt expense Depreciation Warranty expenses Meals and entertainment Life insurance premiums Federal income tax expense Other expenses Total Expenses Net Income -1,950,000 -658,000 -857,000 -50,000 2,300,000 550,000 -9,630,000 (2) -350,000 (3) -1,950,000 -658,000 -857,000 -50,000 (4) -1,750,000 (5) -95,000 (6) -60,000 -25,000 (7) -1,250,000 -350,000 (8) -17,025,000 2,330,000 -95,000 -60,000 -25,000 -1,250,000 10,000 340,000 15,845,000 3,485,000 Notes

OTHER EXPENSES AND TOTAL EXPENSES FOR TAXABLE INCOME ARE -340,000 AND -15,845,000

Palo Alto, Inc.
	Schedule M-1
1	Net income per books
2	Federal income tax per books
3	Excess of capital losses over capital gains
4	Income subject to tax not recorded on books this year (itemize)
5	Expenses recorded on books this year not deducted on this return
	a. Depreciation
	b. Contributions carryover
	c. Travel and entertainment
6	Add lines 1 through 5	$0
7	Income recorded on books this year not included on this return
	a. Tax exempt interest
8	Deductions on this return not charged against book income this year
	a. Depreciation
	b. Contributions carryover
9	Add lines 7 and 8	0
10	Income (line 28, page 1) – line 6 less line 9	$0

RECENT TAX LAWS OF 2018

Answer 1

Unit selling price	$          400.00
Less: Unit Variable cost	$        (240.00)
Unit Contribution Margin	$    160.00
Carla Vista Company'
CVP income statement
For the Month ended Sept 30,2020
	Total	Per Unit
Sales	$ 2,40,000.00	$ 400.00
Variable Costs	$ 1,44,000.00	$ 240.00
Contribution margin	$     96,000.00	$ 160.00
Fixed Costs	$     54,400.00
Net income	$     41,600.00
break even point in units : Fixed cost / Contribution margin per unit
54400 / 160	340	Units
Carla Vista Company'
CVP income statement
For the Month ended Sept 30,2020
	Total	Per Unit
Sales	$ 1,36,000.00	$ 400.00
Variable Costs	$     81,600.00	$ 240.00
Contribution margin	$     54,400.00	$ 160.00
Fixed Costs	$     54,400.00
Net income	$                   -