(Learning Objective 2: Accounting for a corporation’s income tax) The accounting (not the income tax) records of Colorado Rafting, Inc., provide the following comparative income statement for 20X4 and 20X5, respectively.
|
20X4 |
20X5 |
|
|
Total revenue |
$900,000 |
$990,000 |
|
Expenses: |
||
|
Cost of goods sold |
$430,000 |
$460,000 |
|
Operating expenses |
270,000 |
280,000 |
|
Total expenses before tax |
700,000 |
740,000 |
|
Pretax accounting income |
$200,000 |
$250,000 |
Taxable income for 20X4 includes these modifications from pretax accounting income:
a. Additional taxable income of $15,000 for accounting income earned in 20X5 but
taxed in 20X4.
b. Additional depreciation expense of $30,000 for MACRS tax depreciation. The income tax rate is $40%.
Required
1. Compute Colorado Rafting’s taxable income for 20X4.
2. Journalize the corporation’s income taxes for 20X4.
3. Prepare the corporation’s income statement for 20X4.