Nettle Corporation Is Preparing Its First Quarterly Interim Report

question 33

Essay

Nettle Corporation is preparing its first quarterly interim report.It is subject to a corporate income tax rate of 20% on the first $50,000 of taxable income and 35% on taxable income above $50,000.Its estimated pretax accounting income for 2011,by quarter,is:
Nettle expects to earn and receive operating income for the year and does not contemplate any changes in accounting procedures or principles that would affect its pretax accounting income.
Required:
1.Determine Nettle's estimated effective tax rate for 2011.
2.Prepare a schedule to show Nettle's estimated net income for each quarter of 2011.

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Definitions:

Note Receivable

A written promise to pay a specified amount of money, usually with interest, at a future date; it is recorded as an asset on the balance sheet.

Due Date

The specific date by which a payment must be made or a task must be completed.

Promissory Note

A written promise to pay a specified sum of money to a certain individual or entity at a specified date or on demand.

Face Amount

An amount at which bonds sell if the market rate equals the contract rate.