Answer:
A) taxable income = $91500,income tax payable = $27450
d) effective income tax = 28.86%
Explanation:
A) i) taxable income
= pretax financial income + excess rent collected +nondeductible fines -excess depreciation per tax return
= $72600 + $21700 + $11700 - $14500 = $106000 - $14500 = $91500
ii) income taxes payable for 2020
= 30% of taxable income = 30% * 91500 = $27450
B) journal entry for income tax expense, deferred income taxes and income taxes payable for 2020
Income tax expense = debit ( income tax payable - deferred ) $20950
deferred income taxes = debit ( 30% of excess rent collected ) 30% of 21700 = $6500
Income taxes payable = credit ( $27450 )
deferred tax liability = credit ( 30% of excess depreciation per tax return ) 30% of $14500 = $4350
C) Income tax expense section of the income statement for 2020
income statement (partial)
income before taxes = $72600
income tax expense current= $27450
income tax expense - differed = $27450 - $6500 = $20950
net income = income before taxes +( income tax expense - differed)
= $93550
D) effective income tax
= (income tax expense -differed)/ income before taxes = $20950/72600 = 28.86%
