PROBLEM 1 130 POINTS Villanova Routs Kansas, Inc. reports net income per the boo

Question

PROBLEM 1 130 POINTS Villanova Routs Kansas, Inc. reports net income per the books amounting to $9,246,341. The corporation reports the following activity Meals & Entertainment recorded on the books: $138,114 Meals & Entertainment deducted on the tax return: $69,057 Life Insurance Proceeds $10,340,982 Excess Capital Losses: $138,052 Tax Exempt Interest: $269,057 Federal Income Tax Expense: $3,413,755 Depreciation deducted on the tax return: $4,370,000 Depreciation recorded on the books: $1,471,000 Production Activities Deduction: $373,380 Unearned Revenue: $256,083 Charitable Contributions recorded on the books: $371,365 Charitable Contributions deducted on the tax return: $280,473 Required Prepare the corporation's Schedule M-1 reconciliation from book income to taxable income 0

Explanation / Answer

Schedule M-1 Reconciliation of net income to Taxable income Particulars Amount in $ Net Income Per Books            9,246,341 Add: Meals and Entertainment recorded in books               138,114 Excess Capital Losses per books not allowed               138,052 Depreciation recorded in books            1,471,000 Production activities deduction (it will be given from net taxable income)               373,380 Federal Income tax expense (it will be deducted from taxable income)            3,413,755 Charitable Contributions recorded on books               371,365 Less: Meals and Entertainment deducted in tax return               (69,507) Tax exempt interest income             (269,057) Depreciation deducted on tax return         (4,370,000) Unearned revenue             (256,083) Charitable contributions recorded per tax return             (280,473) Net taxable income            9,906,887 *Life insurance proceeds are exempted from tax hence not included

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