Question

Mondial Corporation’s financial accounting records show it had gross revenue of $980,000, cost of goods sold of $420,000, operating expenses of $380,000, and $4,000 of dividends received from a 40-percent-owned owned corporation. Its operating expenses included the following: $6,000 of life insurance premiums on which it was the beneficiary $22,000 of business meal expenses $30,000 of charitable contributions Determine Mondial Corporation’s taxable income. Determine Mondial Corporation’s income tax liability for 2019. Determine Mondial Corporation’s income tax liability if book depreciation is $15,000 less than tax depreciation.

Answer 1

a.)	Mondial Corporation’s taxable income
		Amount $
	Gross Revenue	980,000
	Add: Dividend received	4,000
	Less: Cost of goods sold	420,000
	Less: Operating expenses	380,000
	Add: Life insuarnce premium	6,000
	Add: Meals & Entertainment (22,000 /2 )	11,000
	Add: Chartiable Contribution	30,000
	Taxable Income before DRD & Chartiable donation deduction	231,000
	Less: DRD ( 4,000 x 80% )	3,200
	Less : Chartiable contribution
	( 231,000 x 10% )	23,100
	Taxable Income	204,700
b.)	Tax laibility	$ 63,083	22,250 + ( ( 204,700 - 100,000 ) x 39% )
c.)	Taxable Income before DRD & Chartiable donation deduction	231,000
	Less: Additional Tax depreciation	15000
	Taxable Income before DRD & Chartiable donation deduction	216,000
	Less: DRD ( 4,000 x 80% )	3,200
	Less : Chartiable contribution
	( 231,000 x 10% )	21,600
	Taxable Income	191,200
	Tax laibility	$ 57,818	22,250 + ( (191,200 - 100,000 ) x 39% )