1.Southlawn Inc.'s taxable income is computed asfollows:
Book income before tax
$
2,405,600
Net permanent differences
(512,000
)
Net temporary differences
(189,000
)
Taxable income
$
1,704,600
Using a 34% rate, compute Southlawn's tax expense per books and taxpayable.
a.Tax expense per books $643,824;tax payable $579,564.
b.Tax expense per books $579,564;tax payable $643,824.
c.Tax expense per books $817,904;tax payable $579,564.
d.None of the choices arecorrect.
2.Monro Inc. uses the accrual method of accounting. Here is areconciliation of Monro's allowance for bad debts for the currentyear.
Beginning allowance for bad debts
$
61,150
Actual write-offs of accounts receivable during the year
(80,000
)
Addition to allowance
88,500
Ending allowance for bad debts
$
69,650
Which of the following statements is true?
a.Bad debt expense per books and the deduction for bad debts is$69,650.
b.Bad debt expense per books and the deduction for bad debts is$88,500.
c.Bad debt expense per books is $80,000, and the deduction forbad debts is $88,500.
d.Bad debt expense per books is $88,500, and the deduction forbad debts is $80,000.
3.On December 12, 2016, Hook Company, a calendar year, cashbasis business, mailed a $5,600 bill to Mrs. Gilder forprofessional services rendered during the month of November. Mrs.Gilder dropped off her $5,600 check at Hook's office on December28, but the company secretary did not deposit the check in Hook'sbank account until January 3. Which of the following statements istrue?
a.According to the constructive receipt doctrine, Hook mustrecognize $5,600 income in 2016.
b.According to the substance over form doctrine, Hook does notrecognize $5,600 income until 2017.
c.As a cash basis taxpayer, Hook does not recognize $5,600income until 2017.
d.As a cash basis taxpayer, Hook can elect to recognize $5,600income in either 2016 or 2017
1.Southlawn Inc.'s taxable income is computed asfollows:
Book income before tax | $ | 2,405,600 | |
Net permanent differences | (512,000 | ) | |
Net temporary differences | (189,000 | ) | |
Taxable income | $ | 1,704,600 | |
Using a 34% rate, compute Southlawn's tax expense per books and taxpayable.
a.Tax expense per books $643,824;tax payable $579,564.
b.Tax expense per books $579,564;tax payable $643,824.
c.Tax expense per books $817,904;tax payable $579,564.
d.None of the choices arecorrect.
2.Monro Inc. uses the accrual method of accounting. Here is areconciliation of Monro's allowance for bad debts for the currentyear.
Beginning allowance for bad debts | $ | 61,150 | |
Actual write-offs of accounts receivable during the year | (80,000 | ) | |
Addition to allowance | 88,500 | ||
Ending allowance for bad debts | $ | 69,650 | |
Which of the following statements is true?
a.Bad debt expense per books and the deduction for bad debts is$69,650.
b.Bad debt expense per books and the deduction for bad debts is$88,500.
c.Bad debt expense per books is $80,000, and the deduction forbad debts is $88,500.
d.Bad debt expense per books is $88,500, and the deduction forbad debts is $80,000.
3.On December 12, 2016, Hook Company, a calendar year, cashbasis business, mailed a $5,600 bill to Mrs. Gilder forprofessional services rendered during the month of November. Mrs.Gilder dropped off her $5,600 check at Hook's office on December28, but the company secretary did not deposit the check in Hook'sbank account until January 3. Which of the following statements istrue?
a.According to the constructive receipt doctrine, Hook mustrecognize $5,600 income in 2016.
b.According to the substance over form doctrine, Hook does notrecognize $5,600 income until 2017.
c.As a cash basis taxpayer, Hook does not recognize $5,600income until 2017.
d.As a cash basis taxpayer, Hook can elect to recognize $5,600income in either 2016 or 2017