Information from the Income Statement Columns of Lincoln Corporation's Worksheet

question 55

Essay

Information from the Income Statement columns of Lincoln Corporation's worksheet on December 31, 2013, is shown below. $\begin{array}{lr}\text { Sales } & \$ 920,000 \mathrm{Cr} . \\\text { Purchases } & 620,000 \mathrm{Dr} . \\\text { Selling Expense } & 140,000 \mathrm{Dr} . \\\text { Income Tax Expense } & ?\\\text { General and Administrative Expense } & \$ 90,000 \mathrm{Dr} \\\text { Amortization of Organization. Costs } & 600 \mathrm{Dr} . \\\text { Income Summary } & 170,000 \mathrm{Dr} \\\text { Income Summary } & 210,000 \mathrm{Cr} .\end{array}$ 1. What is the amount of net income before income tax?
2. What is the amount of income tax on the net income? Use the tax rates set forth below.
3. What adjustment is recorded for Income Tax Expense? The corporation paid $21,000 through quarterly deposits.
4. What is the amount of net income after income tax? $$\begin{array} { l l } \text { Taxable Income } & \text { Tax Rate } \\\hline \text { First } \$ 50,000 & 15 \text { percent } \\\text { Next } \$ 25,000 & 25 \text { percent } \\\text { Next } \$ 25,000 & 34 \text { percent } \\\text { Next } \$ 235,000 & 39 \text { percent } \\\text { Over } \$ 335,000 & \text { See IRS publications }\end{array}$$

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Definitions:

Consequence

The outcome or result that naturally follows an action, inaction, or occurrence.

Generation

A group of individuals born and living contemporaneously, sharing similar social, cultural, and economic circumstances.

Adaption

The process by which organisms adjust to new environments or changes in their current environment.

Environment

The surroundings or conditions in which a person, animal, or plant lives or operates; can include natural, social, and built factors.