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

question 68

Essay

Information from the Income Statement columns of King Corporation's worksheet on December 31, 2013, is shown below. $\begin{array}{lr}\text { Sales } & \$ 230,000 \mathrm{Cr} . \\\text { Purchases } & 155,000 \mathrm{Dr} . \\\text { Selling Expense } & 55,000 \mathrm{Dr} . \\\text { Income Tax Expense } & ?\\\text { General and Administrative Expense } & \$ 32,500 \mathrm{Dr} \\\text { Amortization of Organization Costs } & 150 \mathrm{Dr} \\\text { Income Summary } & 42,500 \mathrm{Dr} \\\text { Income Summary } & 52,500 \mathrm{Cr}\end{array}$ 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 $5,000 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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