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ACT360 Assignment 3




Johnny Bravo Company began operations in 2012 and has provided the following information.;1. Pretax financial income for 2012 is $100,000.;2. The tax rate enacted for 2012 and future years is 40%.;3. Differences between the 2012 income statement and tax return are listed below.;(a) Warranty expense accrued for financial reporting purposes amounts to $5,000. Warranty deductions;per the tax return amount to $2,000.;(b) Gross profit on construction contracts using the percentage-of-completion method for book purposes;amounts to $92,000. Gross profit on construction contracts for tax purposes amounts to $62,000.;(c) Depreciation of property, plant, and equipment for financial reporting purposes amounts to $60,000.;Depreciation of these assets amounts to $80,000 for the tax return.;(d) A $3,500 fine paid for violation of pollution laws was deducted in computing pretax financial income.;(e) Interest revenue earned on an investment in tax-exempt municipal bonds amounts to $1,400.;4. Taxable income is expected for the next few years.;1. Use the spreadsheet Journal Entries to prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2012.;2. Draft the income tax expense section of the income statement, beginning with ?Income before income taxes?


Paper#81429 | Written in 18-Jul-2015

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