(Learning Objective 2: Accounting for a corporation’s income tax) The accounting (not the income tax) records of Haynes Publications, Inc., provide the comparative income statement for 20X1 and 20X2, respectively:
|
20X1 |
20X2 |
|
|
Total revenue |
$600,000 |
$720,000 |
|
Expenses: |
||
|
Cost of goods sold |
$290,000 |
$310,000 |
|
Operating expenses |
180,000 |
190,000 |
|
Total expenses before tax |
470,000 |
500,000 |
|
Pretax accounting income |
$130,000 |
$220,000 |
Taxable income for 20X1 includes these modifications from pretax accounting income:
a. Additional taxable income of $10,000 for rent revenue earned in 20X2 but taxed in 20X1.
b. Additional depreciation expense of $20,000 for MACRS tax depreciation. The income tax rate is $40%.
Required
1. Compute Haynes’ taxable income for 20X1.
2. Journalize the corporation’s income taxes for 20X1.
3. Prepare the corporation’s income statement for 20X1.