Southern Atlantic Distributors began operations in January 2021 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 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $240,000, which includes interest revenue of $36,000 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 given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Complete this question by entering your answers in the tabs below. Required Required Required 1 GJ 1 2 Complete the following table given below to record income taxes in 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.) Show lessA Таx Таx $ Recorded as: Rate % Pretax accounting income $ 240,000 Permanent difference Income subject to taxation Temporary difference Income taxable in current year K Required 1 Calculation Required 1 GJ > II
Southern Atlantic Distributors began operations in January 2021 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 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $240,000, which includes interest revenue of $36,000 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 given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Complete this question by entering your answers in the tabs below. Required Required Required 1 GJ 1 2 Complete the following table given below to record income taxes in 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in whole dollars.) Show lessA Таx Таx $ Recorded as: Rate % Pretax accounting income $ 240,000 Permanent difference Income subject to taxation Temporary difference Income taxable in current year K Required 1 Calculation Required 1 GJ > II
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Southern Atlantic Distributors began operations in January 2021 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 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021
was $240,000, which includes interest revenue of $36,000 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 given below and prepare the journal entry to record income taxes in 2021.
2. What is Southern Atlantic's 2021 net income?
Complete this question by entering your answers in the tabs below.
Required Required Required
1 GJ
1
2
Complete the following table given below to record income taxes in 2021. (Amounts to be
deducted should be indicated with a minus sign. Enter your answers in whole dollars.)
Show lessA
Таx
Тax $
Recorded as:
Rate %
Pretax accounting income
$
240,000
Permanent difference
Income subject to taxation
Temporary difference
Income taxable in current
year
K Required1 Calculation
Required 1 GJ >
II
II
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