Amelia, Inc $\text { Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below. }$

question 14

Essay

Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year.Assume a 34% corporate tax rate and no valuation allowance. $\begin{array}{lrr}&\text { Tax Debit/(Credit) }&\text { Book Debit/(Credit) }\\\text { Assets }\\\text { Cash } & \$ 1,200 & \$ 1,200 \\\text { Accounts Receivable } & 20,000 & 20,000 \\\text { Buildings } & 1,200,000 & 1,200,000 \\\text { Acc. Depreciation } & (600,000) & (320,000) \\\text { Furniture \& Fixtures } & 160,000 & 160,000 \\\text { Acc. Depreciation } & \underline{(84,000)} & (60,000) \\\text { Total Assets } & \$ 697,200 & \$ 1.001 .200\\\text { Liabilities }\\\text { Accrued Vacation Pay } & \$-0- & (\$ 108,000) \\\text { Note Payable } & \underline{(464,000)} & (\$ 464,000) \\\text { Total Liabilities } & \underline{\$464,000)} & \underline{(\$ 572,000)}\\\text { Stockholders' Equity }\\\text { Paid in Capital } & (\$ 4,000) & (\$ 4,000) \\\text { Retained Earnings } & (229,200) & (425,200) \\\text { Total Liabilities and } & \underline{(\$ 697.200)} & (\$ 1.001 .200) \\\end{array}$
$\text { Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below. }$
$\begin{array}{lr}&\text { Beginning of Year }\\\text { Accrued Vacation Pay } & \$ 84,000 \\\text { Subtotal } & \$ 84,000 \\\text { Applicable Tax Rate } & \times 34 \% \\\text { Gross Deferred Tax Asset } & \$ 28,560\\\\\text { Building - Acc. Depreciation } & (\$ 244,000) \\\text { Furniture \& fixtures - Acc. Depreciation } & (12,800) \\\text { Subtotal } & (\$ 256,800) \\\text { Applicable tax rate } & \times \quad 34 \% \\\text { Gross deferred tax liability } & (\$ 87,312)\end{array}$ Amelia, Inc.'s, book income before tax is $25,200.Amelia records two permanent book-tax differences.It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and entertainment expense.What is Amelia's total provision for income tax expense reported on its financial statement and its book net income after tax?

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Definitions:

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a subtraction from a business's gross sales.

Net Realizable Value

The amount of cash expected to be received from the sale of inventory, after deducting the costs necessary to make the sale.

Bad Debt

Accounts receivable that a company is unable to collect, representing a financial loss when customers fail to fulfill their payment obligations.

Generally Accepted Accounting Principles

A set of accounting standards and practices that are used to prepare financial statements in the United States, ensuring consistency and comparability across businesses.