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Southern Atlantic Distributors began operations in January 2024 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2024, 30% in 2025, and 20% in 2026. Pretax accounting income for 2024 was $500,000, which includes interest revenue of $52,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table and prepare the journal entry to record income taxes in 2024. 2. What is Southern Atlantic's 2024 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation General Journal Required 2 Complete the following table to record income taxes in 2024. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.

Southern Atlantic Distributors began operations in January 2024 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2024, 30% in 2025, and 20% in 2026. Pretax accounting income for 2024 was $500,000, which includes interest revenue of $52,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table and prepare the journal entry to record income taxes in 2024. 2. What is Southern Atlantic's 2024 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation General Journal Required 2 Complete the following table to record income taxes in 2024. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ces Southern Atlantic Distributors began operations in January 2024 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2024, 30% in 2025, and 20% in 2026. Pretax accounting income for 2024 was $500,000, which includes interest revenue of $52,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table and prepare the journal entry to record income taxes in 2024. 2. What is Southern Atlantic's 2024 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation General Journal Required 2 Complete the following table to record income taxes in 2024. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars. Description Pretax accounting income Permanent difference Tax Recorded as: Amount Tax Rate $ 500,000 $ (20,000) $ 480,000 × 25% $ 120,000 Income tax expense Temporary difference $ (6,000) x 25% = $ (1,500) Deferred tax liability Income taxable in current year $ 474,000 × 25% = $ 118,500 Income tax payable Income subject to taxation A
Transcribed Image Text:ces Southern Atlantic Distributors began operations in January 2024 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2024, 30% in 2025, and 20% in 2026. Pretax accounting income for 2024 was $500,000, which includes interest revenue of $52,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table and prepare the journal entry to record income taxes in 2024. 2. What is Southern Atlantic's 2024 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation General Journal Required 2 Complete the following table to record income taxes in 2024. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars. Description Pretax accounting income Permanent difference Tax Recorded as: Amount Tax Rate $ 500,000 $ (20,000) $ 480,000 × 25% $ 120,000 Income tax expense Temporary difference $ (6,000) x 25% = $ (1,500) Deferred tax liability Income taxable in current year $ 474,000 × 25% = $ 118,500 Income tax payable Income subject to taxation A
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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