In Its First Three Years of Operations Sharp Chairs Reported

question 34

Multiple Choice

In its first three years of operations Sharp Chairs reported the following operating income (loss) amounts: There were no deferred income taxes in any year. In 2017, Sharp elected to carry back its operating loss. The enacted income tax rate was 35% in 2016 and 40% thereafter. In its 2018 balance sheet, what amount should Sharp report as current income tax payable?

• A) $900,000.
• B) $1,260,000.
• C) $1,440,000.
• D) $2,160,000.

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Definitions:

Credit Memo

A document issued to a buyer, crediting them for part of a sale due to a return or overcharge.

Sales Invoice

A document issued by a seller to a buyer, detailing a transaction's products, quantities, and agreed prices for products or services the seller has provided.

Bank Credit Cards

Financial tools issued by banks that allow users to borrow funds for purchases or cash advances, subject to repayment terms and credit limits.

Cash Sales

Transactions where goods or services are exchanged immediately for cash payment.