Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year.Assume a 35% corporate tax rate and no valuation allowance. Assets Cash Accounts Receivable Buildings Accumulated Depreciation Furniture & Fixtures Accumulated Depreciation Total Assets Liabilities Accrued Litigation Expense Note Payable Total Liabilities Tax Debit/(Credit) $3005,000300,000(150,000)40,000(21,000)$174,300$−0−(116,000)(116,000) Book Debit/(Credit) $3005,000300,000(80,000)(40,000)15,000(15,000)($27,000)($116,000)($143,000) ? Stockholders’ Equity Paid in Capital Retained Earnings Total Liabilities and Stockholders’ Equity ($1,000)(57,300)($174,300)($1,000)(106,300)($250,300) Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are listed below. Accrued Litigation Expense Subtotal Applicable Tax Rate Gross Deferred Tax Asset Building - Accumulated Depreciation Furniture & fixtures - Accumulated Depreciation Subtotal Applicable tax rate Gross deferred tax liability Beginning of Year $20,000$20,000×35%$7,000($61,000)(3,000)($64,000)×35%($22,400) ?
Black, Inc.'s, book income before tax is $6,000.Black records two permanent book-tax differences.
It earned $250 in tax-exempt municipal bond interest, and it incurred $500 in nondeductible meals
and entertainment expense.Calculate Black's current tax expense.
Definitions:
Outstanding Checks
Checks that have been written and recorded in the payer's account but not yet cashed or processed by the recipient.
Adjusting Entries
Entries recorded in the journals at the close of an accounting period to distribute income and expenditures to the period they actually took place.
Bank Reconciliation
Bank reconciliation is the process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement.
NSF Check
A check that is not honored by a bank due to insufficient funds in the account of the person who wrote it; also known as a bounced check.