Computing and recording a corporation’s income tax

The accounting records of Reflection Glass Corporation provide income statement data for 2012.

Total revenue

$ 910,000

Total expenses

670,000

Income before tax

$ 240,000

Total expenses include depreciation of $54,000 computed on the straight-line method. In calculating taxable income on the tax return, Reflection Glass uses the modified accelerated cost recovery system (MACRS). MACRS depreciation was $75,000 for 2012. The corporate income tax rate is 36%. Requirements

1. Compute taxable income for the year. For this computation, substitute MACRS depreciation in place of straight-line depreciation.

2. Journalize the corporation’s income tax for 2012.

3. Show how to report the two income tax liabilities on Reflection’s classified balance sheet.