The Matrix Company began operations as of the beginningof 2015. During 2015, Mat
ID: 2718142 • Letter: T
Question
The Matrix Company began operations as of the beginningof 2015. During 2015, Matrix reported GAAP (book) income before taxes of $789,500. For income tax purposes, depreciation expense was $150,000; for GAAP (book) purposes, depreciation expense was $74,000. Matrix accrued $900,000 of revenue for GAAP (book) purposes during 2015; $600,000 of the accrued revenue was taxable during 2015. Matrix earned interest of $79,800 from a municipal bond investment during 2015. Matrix’s marginal income tax rate is 40%. Matrix did not make any income tax payments during 2015. a. Determine Matrix’s taxable income for the year ended December 31, 2015. b. Prepare the 2015 year-end journal entry to record income tax expense.
Explanation / Answer
Accordin to the details:
Taxable Revenue = 600,000
Less:Depriciation for Tax purposes = 150,000
Add: Income from Bond Investment = 79,800
Total taxable Income 600,000-150,000+79,800 = 529,800
Taxes at 40% will be 529800*0.4 = 211,920
Hence total tax payable is $ 211,920
Since this is a tax payable the entry is:
Debit Credit Income Tax Expense 211,920 To Income tax Payable 211,920Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.