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At the end of its first year of operations on Dece...




At the end of its first year of operations on December 31, 2010, the Midland Company reported pretax financial income of $100,000. An investigation of that income revealed the following items: ? Bad debts expense of $12,000 was recognized. The accounts will be written off in 2011. ? Installment sales of $50,000 were recognized in financial income. These sales were accounted for by the installment sales method for income tax purposes. Only $20,000 was reported on the tax return. ? Warranty expenses of $16,000 were accrued for financial reporting purposes, but were not expected to result in a cash payment until 2011. ? Depreciation on the tax return exceeded depreciation for financial reporting purposes by $32,000. Be sure to show your work Required: Compute taxable income


Paper#1539 | Written in 18-Jul-2015

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