Question

PRINTER CALCULATOR FULL SCREEN Question 12 Pronghorn Company reports pretax financial income of $68,400 for 2017. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $17,000. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $21,000. 3. Fines for pollution appear as an expense of $10,300 on the income statement Pronghorn's tax rate is 40% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2017. Your answer is correct. Compute taxable income and income taxes payable for 2017 Taxable income 82700.00 Income taxes payable 33080.00 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT

Answer 1

Account Title and Explanation Debit Credit S, No Income Tax Expense $31,480 Deferred Tax Asset ($21,000* 40%) $8,400 Income Tax Payable $33,080 Deferred Tax Liability ($17,000* 40%) $6,800 Amount Amount ($) Particulars (S) $68,400 Income Before Income Taxes Income Tax Expense Current $33,080 ($1,600) $31,480 Income Tax Expense - Deferred $36,920 Net Income Computation of Effective Tax Rate Effective Tax Rate-Income tax Expense/ Income before Tax 31480/68400-46.02%