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Studentka2010 [4]
2 years ago
7

Cavan Company prepared the following reconciliation between book income and taxable income for the current year ended December 3

1, year 1.
Pretax accounting income ...............................$1,000,000
Taxable income ...................................................(600,000)
Difference $ 400,000 Book-tax differences:
Interest on municipal income ...........................$ 100,000
Lower financial depreciation................................300,000
Total......................................................................$ 400,000
Cavan’s effective Federal and state income tax rate for year 1 is 30%. The depreciation difference will reverse equally over the next three years at enacted tax rates as follows.
Year Tax Rate Year 2 30% Year 3 25% Year 4 25%
In Cavan’s year 1 income statement, the deferred portion of its provision for income taxes should be: __________.
a. $120,000
b. $80,000
c. $100,000
d. $90,000
Business
1 answer:
nadezda [96]2 years ago
5 0

Answer:

b. $80,000

Explanation:

The computation of the deferred portion of its provision for income taxes should be given below:

= $300,000 ÷ 3  years

= $100,000

Now

= 30% of $100,000 + 25% of $100,000 + 25% of $100,000

= $30,000 + $25,000 + $25,000

= $80,000

Therefore the option b is correct

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Explanation:

The journal entry to record the re-issuance of the stock is shown below:

Cash A/c Dr $240,000      (20,000 shares × $12)

Retained earnings A/c Dr  $80,000

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(Being the re-issuance of the stock is recorded)

The computation is shown below:

For treasury stock

= 20,000 shares × ($16 per share - $12 per share)

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So as we can see the retained earnings is decreased by  $80,000

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3 years ago
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Answer

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Explanation  

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3 years ago
professionals who take onwership of their mistakes are said to have: A: a work ethic B: integrity C:dishonesty D:ingenuity
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2 years ago
A company purchased a computer system at a cost of $34,000. The estimated useful life is 8 years, and the estimated residual val
Iteru [2.4K]

Answer:

Year 2= $4,687.5

Explanation:

Giving the following information:

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Year 2= [(25,000 - 6,250)/8]*2= $4,687.5

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3 years ago
If a $4,000 debit to Equipment in a journal entry is incorrectly posted to the ledger as a $4,000 credit and the ledger account
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Answer:

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