Question

The accounting records of Monty Inc. show the following data for 2017 (its first year of operations). 1. Life insurance expense on officers was $8,600. 2. Equipment was acquired in early January for $304,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Monty used a 30% rate to calculate depreciation. 3. Interest revenue on State of New York bonds totaled $3,800. 4. Product warranties were estimated to be $49,900 in 2017. Actual repair and labor costs related to the warranties in 2017 were $9,300. The remainder is estimated to be paid evenly in 2018 and 2019. 5. Gross profit on an accrual basis was $108,000. For tax purposes, $75,900 was recorded on the installment-sales method. 6. Fines incurred for pollution violations were $4,000. 7. Pretax financial income was $793,600. The tax rate is 30%.

(a) Prepare a schedule starting with pretax financial income in 2017 and ending with taxable income in 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Schedule of Pretax Financial Income and Taxable Income for 2017 Pretax financial income $ Permanent differences     Bond Interest Revenue    Installment Sales    Warranty Expense    Pollution Fines    Interest Expense    Depreciation Expense    Repair and Labor Costs    Insurance Expense         Pollution Fines    Insurance Expense    Depreciation Expense    Warranty Expense    Installment Sales    Interest Expense    Repair and Labor Costs    Bond Interest Revenue         Bond Interest Revenue    Depreciation Expense    Installment Sales    Insurance Expense    Warranty Expense    Pollution Fines    Repair and Labor Costs    Interest Expense     Temporary differences     Installment Sales    Repair and Labor Costs    Depreciation Expense    Insurance Expense    Pollution Fines    Bond Interest Revenue    Warranty Expense    Interest Expense         Pollution Fines    Depreciation Expense    Repair and Labor Costs    Insurance Expense    Bond Interest Revenue    Installment Sales    Warranty Expense    Interest Expense         Depreciation Expense    Installment Sales    Repair and Labor Costs    Warranty Expense    Interest Expense    Insurance Expense    Pollution Fines    Bond Interest Revenue     Taxable income Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT LINK TO TEXT

Answer 1