Question 3 (20 MARKS) During 2018, Vancare Company first year of operations, the company reported pretax...

Question 3 During 2018, Vancare Company first year of operations, the company reported pretax financial income of $580,000. Vancare’s enacted tax rate is 35% for 2018 and 40% for all later years. Vancare expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2018, are summarized below. FUTURE YEARS 2019 2020 2021 2022 2023 Total Future taxable (deductible) amounts Instalment sales $80,000 $80,000 $80,000 $240,000 Depreciation $12,000 $12,000 $12,000 $12,000 $12,000 $ 60,000 Unearned rent ($35,000) ($35,000) ($70,000) Instructions (a) Prepare a schedule to show the calculation of deferred taxes at December 31, 2018. (b) Compute taxable income for 2018. (c) Prepare the journal entry to record income taxes payable, deferred taxes and income tax expense for 2018. Listed below are items that are treated differently for accounting purposes than they are for tax purposes. (d) (i) Explain the difference between a temporary difference and a permanent difference.

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Razorback Financial Corp., in its first year of operations in 2018, reported pretax financial income of...

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Nueva Company reported the following pretax data for its first year of operations. Net sales 7,340...

Nueva Company reported the following pretax data for its first year of operations. Net sales 7,340 Cost of goods available for sale 5,790 Operating expenses 1,728 Effective tax rate 25 % Ending inventories: If LIFO is elected 618 If FIFO is elected 798 How much more will Nueva report in income tax if it elects FIFO instead of LIFO? $155. $135. $110. $45.

Nu Company reported the following pretax data for its first year of operations. Net sales 2,880...

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Question 3 Starlight reported the following pretax financial income (loss) for the years 2018–2021. Pretax Income (Loss) Tax Rate 2018 330,000 35% 2019 (60,000) 35% 2020 (800,000) 21% 2021 30,000 21% Pretax financial income (loss) and taxable income (loss) were the same for all years involved. Instruction Prepare the journal entries for the years 2019 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. Additionally, assume that based on the weight of available...

During 2018, its first year of operations, Baginski Steel Corporation reported a net operating loss of...

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In 2016, its first year of operations, Banks Corp. reported pretax income of $200,000 and paid...

In 2016, its first year of operations, Banks Corp. reported pretax income of $200,000 and paid $60,000 of taxes. In 2017, Banks Corp. reported pretax income of $150,000 and paid $45,000 of taxes. In 2018, Banks incurred a $400,000 net operating loss. For all years the tax rate is 30% and there were no differences between taxable income and pretax financial statement income. Also, assume the current tax law (under the TCJA of 2017 that does not allow loss carrybacks)....

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For 2018 tax purposes, Cass Corporation reported pretax book income of $10,000,000. During the current year,...

For 2018 tax purposes, Cass Corporation reported pretax book income of $10,000,000. During the current year, the reserve for bad debts increased by $100,000. In addition, tax depreciation exceeded book depreciation by $200,000. Cass Corporation sold a fixed asset and reported book gain of $50,000 and tax gain of $75,000. Finally, the company received $250,000 of tax-exempt life insurance proceeds from the death of one of its officers. Compute the company’s current income tax expense or benefit.

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Mitch Company prepared the following reconciliation for the first year of operations: Pretax financial income for 2019 4,500,000 Permanent difference (357,000) Temporary difference (1,125.000) The temporary difference will reverse evenly in 2020 and 2021, at an enacted tax rate of 35% in 2019 and 32% in 2020. The enacted tax rate for 2019 is 30%. What amount should be reported as deferred tax asset or liability on December 31, 2019? (Specify whether asset or liability)

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