Metals Corporation reports pretax financial income of $260,000 for 2020. The following items cause taxable income...

Metals Corporation reports pretax financial income of $260,000 for 2020. The following items cause taxable income to be different than pretax financial income: 1. Rental income on the income statement is less than rent collected on the tax return by $65,000. 2. Depreciation on the tax return is greater than depreciation on the income statement by $40,000. 3. Interest on an investment in a municipal bond of $6,500 on the income statement. Metal’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020.

Compute taxable income and income taxes payable for 2020. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (c) Prepare the income tax expense section of the income statement for 2020, beginning with the line “Income before income taxes.” (d) Compute the effective income tax rate for 2020.

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ekkarill92 answered 1 year ago

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