XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6.
XYZ corp. | Book Income |
||
Income statement | |||
For current year | |||
Revenue from sales | $ | 40,000,000 | |
Cost of Goods Sold | (27,000,000 | ) | |
Gross profit | $ | 13,000,000 | |
Other income: | |||
Income from investment in corporate stock | 300,000 | 1 | |
Interest income | 20,000 | 2 | |
Capital gains (losses) | (4,000 | ) | |
Gain or loss from disposition of fixed assets | 3,000 | 3 | |
Miscellaneous income | 50,000 | ||
Gross Income | $ | 13,369,000 | |
Expenses: | |||
Compensation | (7,500,000 | )4 | |
Stock option compensation | (200,000 | )5 | |
Advertising | (1,350,000 | ) | |
Repairs and Maintenance | (75,000 | ) | |
Rent | (22,000 | ) | |
Bad Debt expense | (41,000 | )6 | |
Depreciation | (1,400,000 | )7 | |
Warranty expenses | (70,000 | )8 | |
Charitable donations | (500,000 | )9 | |
Meals | (18,000 | ) | |
Goodwill impairment | (30,000 | )10 | |
Organizational expenditures | (44,000 | )11 | |
Other expenses | (140,000 | )12 | |
Total expenses | $ | (11,390,000 | ) |
Income before taxes | $ | 1,979,000 | |
Provision for income taxes | (720,000 | )13 | |
Net Income after taxes | $ | 1,259,000 | 14 |
Notes:
Estimated tax information:
XYZ made four equal estimated tax payments totaling $480,000. For purposes of estimated tax liabilities, assume XYZ reported a tax liability of $800,000 in 2017. During 2018, XYZ determined its taxable income at the end of each of the four quarters as follows:
Quarter-end | Cumulative taxable income (loss) | ||
First | $ | 350,000 | |
Second | $ | 800,000 | |
Third | $ | 1,000,000 | |
Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
a. Compute XYZ’s taxable income.
b. Compute XYZ’s regular income tax liability. (Use Corporate Tax Rate Schedule.)
c. Complete XYZ’s Schedule M-1. (Enter all amounts as positive numbers.)
e. Compute XYZ’s alternative minimum tax, if any.
XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported...
XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income 20,000 2 Capital gains (losses) (4,000 ) Gain or...
XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp.BookIncomeIncome statementFor current yearRevenue from sales$40,000,000Cost of Goods Sold(27,000,000)Gross profit$13,000,000Other income:Income from investment in corporate stock300,0001Interest income20,0002Capital gains (losses)(4,000)Gain or loss from disposition of fixed assets3,0003Miscellaneous income50,000Gross Income$13,369,000Expenses:Compensation(7,500,000)4Stock option compensation(200,000)5Advertising(1,350,000)Repairs and Maintenance(75,000)Rent(22,000)Bad Debt expense(41,000)6Depreciation(1,400,000)7Warranty expenses(70,000)8Charitable donations(500,000)9Meals(18,000)Goodwill impairment(30,000)10Organizational expenditures(44,000)11Other expenses(140,000)12Total expenses$(11,390,000)Income before taxes$1,979,000Provision for income...
[The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income...
[The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2018. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1...
The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income...
Required informationSkip to question[The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp.BookIncomeIncome statementFor current yearRevenue from sales$40,000,000Cost of Goods Sold(27,000,000)Gross profit$13,000,000Other income:Income from investment in corporate stock300,0001Interest income20,0002Capital gains (losses)(4,000)Gain or loss from disposition of fixed assets3,0003Miscellaneous income50,000Gross Income$13,369,000Expenses:Compensation(7,500,000)4Stock option compensation(200,000)5Advertising(1,350,000)Repairs and Maintenance(75,000)Rent(22,000)Bad Debt...
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 20 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) a. Assume XYZ has a marginal tax rate of 21 percent for the foreseeable future and earns an after-tax rate of return of 9 percent on its assets. Joel Johnson, XYZ’s...
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 40 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. b. Assume Julie, an XYZ employee, has the option of participating in XYZ’s deferred compensation plan. Julie’s marginal tax rate is 37 percent and she expects the rate to remain constant over the next five years. Julie is trying to decide how much deferred...
EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s financial records reveal the following information: EFG earned $10,700 on an investment in tax-exempt municipal bonds. EFG’s allowance for bad debts as of January 1 was $21,000. Write-offs for the year totaled $4,400, while the addition to the allowance was $3,700. The allowance as of December 31 was $20,300. On August 7, EFG paid a $6,000...
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