ACCT 312 Week 3 Case Study A and B
Super SportsInc. Reported pretax financial income of $260,000 for the year 2016. Taxable income of Super Sports is however different from its pretax financial income because of the items given below.
- Depreciation deducted on the tax return is $40,000 greater than the depreciation charged on Income Statement.
- Estimated Warranties Expenses charged to Income Statement is $30,000 but Warranties expenses deductible on tax return are $20,000
- $3,200 appear in the income statement of Super Sports as Fines and penalties paid.
- Super Sports received $ 6,000 interest from Tax Saving Municipal Bonds.
Enacted Tax Rate for the year 2016 is 30% and for 2017 is 35%
Required: For the year 2016, SuperSports Inc. requests you to:
- Identify items of permanent and temporary difference from the information given
- What items of temporary difference result in future taxable amounts and what items will result in future deductible amounts
- Compute Taxable Income
- Compute-current income tax expense/Tax payable
- Compute deferred taxes (Deferred Tax Liability and Deferred Tax Asset)
- Record journal entry for Income Tax Expense
- Show how deferred taxes will be reported in the Balance Sheet.
(BOTH IN WORD AND EXCEL FORMAT)
ACCT 312 Week 3 Case Study