p 11 5 4 a l earn i ng obj ec tiv e 3 acco u n t f or a cor p ora ti on s i nco m e 1399201

P11-54A (Learning Objective 3: Account for a corporation’s income tax) The accounting (not the income tax) records of Mahoney Publications, Inc., provide the income statement for 2012.

 

	2012
Total   revenue  …………………………………….	$900,000
Expenses: Cost  of  goods sold………………………….	$470,000
Operating expenses ………………………..	260,000
Total expenses before tax………………..	730,000
Pretax accounting income …………………..	$170,000

 

Taxable income for 2012 includes these modifications from pretax accounting income:

a.    Additional taxable income of $16,000 earned in 2013 but taxed in 2012

b.   Additional depreciation expense of $45,000 for MACRS tax depreciation in 2012 The income tax rate is 40%.

▶ Requirements

1. Compute Mahoney’s taxable income for 2012.

2. Journalize the corporation’s income taxes for 2012.

3. Prepare the corporation’s income statement for 2012.