Use the Following Information for Questions

question 26

Multiple Choice

Use the following information for questions.
Lyons Company deducts insurance expense of $84,000 for tax purposes in 2010, but the expense is not yet recognized for accounting purposes.In 2011, 2012, and 2013, no insurance expense will be deducted for tax purposes, but $28,000 of insurance expense will be reported for accounting purposes in each of these years.Lyons Company has a tax rate of 40% and income taxes payable of $72,000 at the end of 2010.There were no deferred taxes at the beginning of 2010.
-Assuming that income tax payable for 2011 is $96,000, the income tax expense for 2011 would be what amount?

• A)$129,600
• B)$107,200
• C)$96,000
• D)$84,800

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Definitions:

Total Revenue

The total amount of money received by a company from its sales or services before any expenses are subtracted.

Profit-maximizing

A strategy or process that firms adopt to determine the price, output level, and input use that leads to the highest possible profit.

Average Total Cost

Calculated by dividing total cost by the quantity of output produced; it's the cost of producing the average unit of output.

Demand Schedule

Shows how much of a given product a household would be willing to buy at different prices for a given time period.