For 2011, Permtemp reported the following book income statement and balance sheet, excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:
Sales $33,000,000
Cost of goods sold) (22,000,000)
Gross profit $11,000,000
Dividend income 55,000
Tax-exempt interest income 15,000
Total income $11,070,000
Expenses:
Depreciation $ 800,000
Bad debts 625,000
Charitable contributions 40,000
Interest 455,000
Meals and entertainment 60,000
Other 4,675,000
Total expenses) (6,655,000)
Net income before federal income taxes $ 4,415,000
Cash $ 2,125,000
Accounts receivable $ 3,300,000
Allowance for doubtful accounts (450,000) 2,850,000
Inventory 6,000,000
Fixed assets $10,000,000
Accumulated depreciation (1,600,000) 8,400,000
Investment in corporate stock 1,000,000
Investment in tax-exempt bonds 50,000
Total assets $20,425,000
Accounts payable $ 2,120,000
Long-term debt 8,500,000
Common stock 6,000,000
Retained earnings 3,805,000
$20,425,000
Additional information for 2011:
Depreciation for tax purposes is $2.45 million under MACRS.
Bad debt expense for tax purposes is $425,000 under the direct writeoff method.
Qualified production activities income is $3 million.
Required for 2011:
Prepare page 1 of the 2011 Form 1120, computing the corporations taxable income and tax liability.
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For 2011, Permtemp reported the following book income statement and balance sheet, excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:
Sales $33,000,000
Cost of goods sold) (22,000,000)
Gross profit $11,000,000
Dividend income 55,000
Tax-exempt interest income 15,000
Total income $11,070,000
Expenses:
Depreciation $ 800,000
Bad debts 625,000
Charitable contributions 40,000
Interest 455,000
Meals and entertainment 60,000
Other 4,675,000
Total expenses) (6,655,000)
Net income before federal income taxes $ 4,415,000
Cash $ 2,125,000
Accounts receivable $ 3,300,000
Allowance for doubtful accounts (450,000) 2,850,000
Inventory 6,000,000
Fixed assets $10,000,000
Accumulated depreciation (1,600,000) 8,400,000
Investment in corporate stock 1,000,000
Investment in tax-exempt bonds 50,000
Total assets $20,425,000
Accounts payable $ 2,120,000
Long-term debt 8,500,000
Common stock 6,000,000
Retained earnings 3,805,000
$20,425,000
Additional information for 2011:
Depreciation for tax purposes is $2.45 million under MACRS.
Bad debt expense for tax purposes is $425,000 under the direct writeoff method.
Qualified production activities income is $3 million.
Required for 2011:
Prepare page 1 of the 2011 Form 1120, computing the corporations taxable income and tax liability.
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