Question

Company A started business on January 1, 20X1, and bought the following piece of equipment.

Cost of asset	$150,000
Useful life	3
Tax rate	21%
20X1 estimated tax payment	1,800

Depreciation for book and tax purposes is as follows:

	Book	Tax
20X1	40,000	100,000
20X2	40,000	20,000
20X3	40,000	0

20X1 income statement information:

Sales	638,000
Expenses (does not include depreciation expense and tax expense)	510,000

What is ending taxes payable on the December 31, 20X1 balance sheet?

Answer 1

	Cost of Assets	$150,000
	useful life	3 years
	Tax Rate	21%
	Depreciation As per books	Depreication as per Tax
20X1	40,000	100,000
20X2	40,000	20,000
20X3	40,000	-
20X1	Income & Expense tatement for 20X1
	Sales	$                      638,000.00
	Expenses excluding depreciation and Taxes	$                      510,000.00
	Gross Income	$                      128,000.00
	Less Depreciation Expeneses as per Tax	$                      100,000.00
	Net Income	$                        28,000.00
	Tax @ 21%	$                                5,880
	Estimated tax payment	$                                1,800
	Net Tax payable for December 31st 20X1	$                                4,080