At the End of 2017, Its First Year of Operations

question 41

Multiple Choice

At the end of 2017, its first year of operations, Ontario Corp. prepared the following reconciliation between pre-tax accounting income and taxable income: The estimated lawsuit expense of $750,000 will be deductible in 2019 when it is expected to be paid. The instalment sales will be realized at $300,000 in each of the next two years. The income tax rate is 30% for all years. The total income tax expense to be reported on the income statement is

• A)$90,000.
• B)$135,000.
• C)$150,000.
• D)$300,000.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency in managing stock levels.

Number of Days' Sales

A financial metric that measures how quickly a company can convert its inventory into sales.

Inventory Costing

The method used to assign costs to inventory and cost of goods sold, including techniques such as First-In First-Out (FIFO), Last-In Last-Out (LIFO), and weighted average cost.

Estimated Rate

An approximation used to calculate various financial metrics, often used when the exact value is unknown.