Question

Kensington had this info at the end of 2015, its first year of operations:Pretax book income $800.000Prepaid expense 300,000Excess of tax over book depreciation 200,000 Interest Income on municipal bonds 100.000No other permanent or temporary differences exist. The prepaid expense will be expensed in 2018; the depreciation will reverse evenly over the next three years. Tax rate is 30%. Future net income is probable. The 12/31/15 Income Tax Payable is:______.a. $60,000.b. $240,000.c. $210,000.d. $180,000.e. $360,000.

Answer 1

D. $180,000

Step-by-step explanation:

Calculation for the 12/31/15 Income Tax Payable

Using this formula

Income tax payable =(Pretax book income-Excess of tax over book depreciation)× Tax rate

Let plug in the formula

Income tax payable=($800,000-$200,000)×30%

Income tax payable=$600,000×30%

Income tax payable=$180,000

Therefore the 12/31/15 Income Tax Payable is $180,000