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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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3 0
3 years ago
The cash price of this machine was $54,500. Related expenditures included: sales tax $2,050, shipping costs $100, insurance duri
marin [14]

Answer:

Under striaght line the depreciation wil be of 10,548 dollar per year.

Explanation:

the accouting will enter the asset as the sum of all necessary cost to aquire it and leave it ready for use:

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taxes         2,050

shipping       100

insurance      110

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(56,840 - 4,100) / 5 = 10.548‬

8 0
3 years ago
Jill inherited 100 shares of gotech inc. Stock when her mother died on october 21, 2015; the fair market value of the stock was
leonid [27]

Answer: Jill earned a profit of $3000 on selling the shares she inherited. Since she sold the shares after holding it for more than one year (12 months), she should report the income as a long-term capital gain on her income tax return.

After her mother's death, Jill will inherit the 100 shares if Gotech inc at the fair market at the time of inheritance - 21st October  2015.

Fair Market value = 100 * 20 =2000

Her gain upon selling the shares on June 3 2018 is

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Jill held on to shares for a little less than two years and eight months after inheriting them before she decided to sell.  

7 0
3 years ago
The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If
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Answer:

B. $2,000

Explanation:

Given;

Total cost of ending inventory = $9,000

Total number of units = 600

Over heads cost = $3,000 and the overhead rate is 75% of direct labor

Let direct labour cost be y

75% × y = 3000

3y/4 = 3000

y = 4 × 3000/3

y = $4,000

Total Inventory cost = direct material cost + direct labour cost + overheads

9000 = direct material cost + 4000 + 3000

direct material cost = 9000 - 7000

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3 years ago
Louis wrote a check of $100 to the electricity company. After a few days he received a Notice of Dishonor from the bank regardin
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