Question

Southern Atlantic Distributors began operations in January 2018 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 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $320,000, which includes interest revenue of $30,000 from municipal bonds. The enacted tax rate is 40%. 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 2018. 2. What is Southern Atlantic’s 2018 net income?

Answer 1

sogigt ne Do pTociaton ac n oo 2ol8 50%) 20000 C30%) 000 1-2006 nolg 20 20 202/ lo O oO Hoo ao OIA L

Expehs Poovision fos T IDoo Payable E pens e Hooo Ligbility 2 Incoe tatemotGooo 12000 Hooo 2

Net 22Oo0 O TUtqズ CL。ss) Tax ex once 112o0 O 9 11600 0 qズ 40 0 0 otooc