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.

Expert Solution

ekkarill92 answered 2 years ago

Stellar Company reports pretax financial income of $66,100 for 2020. The following items cause taxable income...

Stellar Company reports pretax financial income of $66,100 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $14,800. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $23,900. 3. Fines for pollution appear as an expense of $10,600 on the income statement. Stellar’s tax rate is 30% for all years, and...

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Shamrock Company reports pretax financial income of $76,100 for 2020. The following items cause taxable income...

Shamrock Company reports pretax financial income of $76,100 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $16,700. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $22,700. 3. Fines for pollution appear as an expense of $11,100 on the income statement. Shamrock’s tax rate is 30% for all years, and...

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Sheffield Company reports pretax financial income of $76,500 for 2020. The following items cause taxable income...

Sheffield Company reports pretax financial income of $76,500 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $15,700. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $23,400. 3. Fines for pollution appear as an expense of $10,500 on the income statement. Sheffield’s tax rate is 30% for all years, and...

Metlock Company reports pretax financial income of $65,000 for 2020. The following items cause taxable income...

Metlock Company reports pretax financial income of $65,000 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $16,400. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $23,100. 3. Fines for pollution appear as an expense of $11,200 on the income statement. Metlock’s tax rate is 30% for all years, and...

Splish Company reports pretax financial income of $66,300 for 2020. The following items cause taxable income...

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Whispering Company reports pretax financial income of $66,100 for 2020. The following items cause taxable income...

Whispering Company reports pretax financial income of $66,100 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $14,800. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $23,900. 3. Fines for pollution appear as an expense of $10,600 on the income statement. Whispering’s tax rate is 30% for all years, and...

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