Permanent and Temporary Differences
The company reported pretax financial income in its income statement of $50,000. Among the items included in the computation of pretax financial income were the following:
|
Interest revenue from municipal bonds |
$10,000 |
|
Nondeductible expenses |
17,000 |
|
Warranty expenses (not deductible until actually provided; |
|
|
none provided this year) |
8,000 |
The income tax rate is 30%. Compute the following: (1) financial income subject to tax, (2) taxable income, (3) income tax expense, and (4) net income.