Question

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows:Pretax accounting income $220,000Permanent difference (14,000) 206,000Temporary difference-depreciation (19,200)Taxable income $186,800Tringali's tax rate is 38%.What should Tringali report as its income tax expense for its first year of operations?$78,280.$70,984.$83,600.$82,281.

Answer 1

$78,280

Step-by-step explanation:

Pretax accounting income 220,000

Permanent difference (14,000)

Temporary difference-depreciation (19,200)

Taxable income 186,800

From the taxable income we will determinate the tax payable:

186,800 x 38% = 70,984

The temporary diffrence will generate a deferred liaiblity

19,200 x 38% = 7,296

The accounting income tax expense, will be the sum of both concept:

70,984 + 7,296 = 78,280

Income tax expense 78,280 debit

deferrred income (liab) 7,296 credit

income tax payable 70,984 credit