Computation of taxable income.
The records for Orkin Co. show this data for 2011:
Life insurance on officers was $3,800.
Machinery was acquired in January for $300,000. Straight-line depreciation over a 10-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Orkin may deduct 14% for 2011.
Interest received on tax exempt Iowa State bonds was $9,000.
The estimated warranty liability related to 2011 sales was $19,600. Repair costs under warranties during 2011 were $13,600. The remainder will be incurred in 2012.
Pretax financial income is $600,000. The tax rate is 30%.
a) Prepare a schedule starting with pretax financial income and compute taxable income.
b) Prepare the journal entry to record income taxes for 2011.© BrainMass Inc. brainmass.com June 4, 2020, 12:10 am ad1c9bdddf
The solution explains how to calculate the taxable income and how to prepare the journal entry to record the income taxes