Question

Rockford Practice Set 16 edition - Periodic - Alternative Set of Instructions

Step 6. Complete the work sheet. In completing the worksheet, compute State of Illinois corporate rate income taxes at 4% of pretax income. The state income tax is deductible on the federal tax return, and the federal tax is NOT deductible on the Illinois return. Assume rederal corporate tax on income subject to federal tax is as follows:

first $50,000 @15%

next $25,000 @25%

remainder @34%

Income between $100,000 and $335m0000 is assessed at 5% federal surtax, not to exceed $11,750.

**** if there is not enough information please comment and I will add more information from project if I know what numbers are needed**

Answer 1

Given the pretax income =$254,608.

Also mentioned that state corporate income tax=4.00% and it is deductible while calculation of federal income tax.Hence, state corporate income tax=$254,608 *4.00% =$10184.32

Given income tax rate for federal tax are up to $50,000 it is15%, next 25,000 it is 25% and the balance at 34%.

Taxable income for federal tax computation purpose is pre tax income - income tax of state

=$254,608 -$10184.32.

=$244423.68

Federal income tax on the above income is as follows:

Amount	Rate	Tax	Calculation
$50,000.00	15%	$7,500.00	50000*15%
$25,000.00	25%	$6,250.00	25000*25%
$168,150.64	34%	$57,171.22	(243,150.64-75000)*34%
$143,150.64	5%	$7,221.18	Federal sur tax=(244423.68-100000)*5%
Total		$78,142.40

Given that estimated income tax expense throughout the year =$72,000.

Hence, it is assumed that this amount is already paid.

Balance amount is to be paid.ie., ($78,142.40 +$10,184.32) -$72,000

=$16326.72

So, the journal entry for the income tax payable is as follows:

Date	Entry		Debit	Credit
31-Dec	Income tax expense a/c Dr		$16326.72
	To Income tax payable a/c Cr			$16326.72
	(Being income tax payable recorded in the books)