Black, Inc ?
Black, Inc

question 6

Essay

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.
?
Tax Debit/(Credit)
Book Debit/(Credit)
Assets
Cash
$ 300
$ 300
Accounts Receivable
5,000
5,000
Buildings
300,000
300,000
Accumulated Depreciation
(150,000)
(80,000)
Furniture & Fixtures
40,000
40,000
Accumulated Depreciation
(21,000)
(15,000)
Total Assets
$174,300
$250,300
?
Liabilities
Accrued Litigation Expense
$ -0-
($ 27,000)
Note Payable
(116,000)
(116,000)
Total Liabilities
($116,000)
($143,000)
?
Stockholders' Equity
Paid in Capital
($ 1,000)
($ 1,000)
Retained Earnings
(57,300)
(106,300)
Total Liabilities and
Stockholders' Equity
?
($174,300)
?
($250,300)
Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are listed below. $\begin{array}{l}&\text { Beginning of Year }\\\text { Accrued Litigation Expense } & \underline{ \$ 20,000} \\\text { Subtotal } & \$ 20,000 \\\text { Applicable Tax Rate } & \underline{ \times 35 \%} \\ \text { Gross Deferred Tax Asset } & \$ \underline{\$ 7.000} \\\\\text { Building - } &(\$61,000)\\\quad \text { Accumulated Depreciation } \\\text { Furniture \& fixtures - } & \underline{(3,000)}\\\quad \text { Accumulated Depreciation } \\\text { Subtotal } &(\$64,000)\\\text { Applicable tax rate } & \underline{\times35\%}\\\text { Gross deferred tax liability }& \underline{(\$22,400)}\end{array}$ ?
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.Provide the journal entry to record Black's current tax expense.

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Definitions:

Functioning

Pertains to the operation or performance of a system, component, or organism, denoting how well it works or fulfills its intended purpose.

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Best Employees

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