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Finger [1]
3 years ago
10

For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $984,000. Selected information f

or 2021 from Fidelity’s records follows: Interest income on municipal governmental bonds $ 40,000 Depreciation claimed on the 2021 tax return in excess of depreciation on the income statement 64,000 Carrying amount of depreciable assets in excess of their tax basis at year-end 104,000 Warranty expense reported on the income statement 30,000 Actual warranty expenditures in 2021 20,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $10,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required: 1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry. 2. What is Fidelity’s 2021 net income?
Business
1 answer:
Sati [7]3 years ago
6 0

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

1).

Particular Amount ($) Tax rate                  Tax amount($)

Accounting income $984,000  

Less-Interest income on municipal bond -$40,000  

Income to taxation $944,000 $0.25                 $236,000

Less-tax return in excess of depreciation -$64,000 0.25 $16,000

Warranty expenses($30,000-$20,000) $10,000 0.25 $2,500

Taxable income $890,000 0.25 $222,500

Now

Journal Entry

Income tax expense A/c      Dr.$236,000

Deferred  tax asset A/c      Dr.$2500

To Deferred  tax liability A/c   $16,000

To Income tax payable A/c        $222,500  

(Being the income tax  expense for 2021 is recorded )

2 .Net Income of Fidelity = Accounting Income - Income Tax Expense

= $984,000 - $236,000

= $784,000

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Explanation:

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2 years ago
The price elasticity of supply for umbrellas is 2. Suppose you're told that following a price increase, quantity supplied increa
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Answer:

15%

Explanation:

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3 years ago
What is a government department business?
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Answer:

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5 0
3 years ago
Chang Industries has 2,500 defective units of product that have already cost $14.50 each to produce. A salvage company will purc
Lubov Fominskaja [6]

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$27,250

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For computing the incremental income or loss on reworking the units first we need to follow some steps which is shown below:-

Incremental revenue per unit = Selling price after rework - Selling price as scrap

= $22.00 - $5.60

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Total Incremental Revenue = Incremental revenue per unit × Total defective units

= $16.40 × 2,500

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Total rework costs = Total defective units × Defects per unit

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7 0
3 years ago
Suppose Russia and Sweden each produce only paper and cars. Russia can produce 8 tons of paper or 4 million cars each year. Swed
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Answer:

Attached grap with point A and B.

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Russia will produce the cars as their production has te lower opportunity cost:

(Note: Opportunity cost is the amount of production resigned for the current output)

<u>Sweden pportunity cost for production car: </u>

25 ton of papper / 5 m cars = 5 tons per millon of cars

<u>Russia pportunity cost for production car: </u>

8 ton of papper / 4 m cars = 2 tons per millon of cars

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and receive 6 tons of pappers

8 0
3 years ago
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