Question;Module 6: Problem 1.;The following differences enter into;the reconciliation of financial income and taxable income of Abbott Company for;the year ended December 31, 2012, its first year of operations. The enacted;income tax rate is 30% for all years.;Pretax;accounting income;$700,000;Excess tax;depreciation;(320,000);Litigation;accrual;70,000;Unearned;rent revenue deferred on the books but appropriately recognized in taxable;income;80,000;Interest;income from New York municipal bonds;(20,000);Taxable;income;$510,000;1. Excess tax depreciation will reverse equally;over a four-year period, 2013-2016.;2. It is estimated that the litigation;liability will be paid in 2016.;3. Rent revenue will be recognized during the;last year of the lease, 2016.;4. Interest revenue from the New York bonds is;expected to be $20,000 each year until their maturity at the end of 2016.;Instructions;(a);Prepare a schedule of future taxable and (deductible) amounts.;(b);Prepare a schedule of the deferred tax (asset) and liability.;(c);Since this is the first year of operations, there is no beginning;deferred tax asset or liability. Compute the net deferred tax expense;(benefit).;d) Prepare the journal entry;to record income tax expense, deferred taxes, and the income taxes payable for;2012.;The;May 31, 2012, balance per bank statement for Upton Company was $7,200. The cash;balance per books was $9,500. Outstanding checks amounted to $800, and deposits;in transit were $2,400. The bank statement contained an NSF check for $500, a;service charge for $25, and a debit memo for direct payment of the telephone;bill of $175.;Required;1) Prepare a bank reconciliation to determine the true cash balance at May 31;2012.
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