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Presentation/PPT
27/08/2022
“Permtemp Corporation formed in 2009 and, for that year, reported the following book income statement and balance sheet, excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:Sales $20,000,000Cost of goods sold) (15,000,000)Gross profit $ 5,000,000Dividend income 50,000Tax-exempt interest income 15,000Total income $ 5,065,000Expenses: Depreciation $ 800,000Bad debts 400,000Charitable contributions 100,000Interest 475,000Meals and entertainment 45,000Other 3,855,000Total expenses) 5,675,000Net loss before federal income taxes $ (610,000)Cash $ 500,000Accounts receivable $ 2,000,000Allowance for doubtful accounts) (250,000) 1,750,000Inventory 4,000,000Fixed assets $10,000,000Accumulated depreciation) (800,000) 9,200,000Investment in corporate stock 1,000,000Investment in tax-exempt bonds 50,000Total assets $16,500,000Accounts payable $2,610,000Long-term debt 8,500,000Common stock 6,000,000Retained earnings) (610,000)Total liabilities and equity $16,500,000Additional information for 2009:• The investment in corporate stock is comprised of less-than-20%-owned corporations.• Depreciation for tax purposes is $1.4 million under MACRS.• Bad debt expense for tax purposes is $150,000 under the direct writeoff method.• Limitations to charitable contribution deductions and meals and entertainment expenses must be tested and applied if necessary.• Qualified production activities income is zero.Required for 2009:a. Prepare page 1 of the 2009 Form 1120, computing the corporation’s NOL.b. Determine the corporation’s deferred tax asset and deferred tax liability situation, and then complete the income statement and balance sheet to reflect proper GAAP accounting under ASC 740. Use the balance sheet information to prepare Schedule L of the 2009 Form 1120.c. Prepare the 2009 Schedule M-3 for Form 1120.d. Prepare a schedule that reconciles the corporation’s effective tax rate to the statutory 34% tax rate.Note: For 2009 forms, go to forms and publications, previous years, at the IRS website, www.irs.gov.For 2010, Permtemp reported the following book income statement and balance sheet, excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:Sales $33,000,000Cost of goods sold) (22,000,000)Gross profit $11,000,000Dividend income 55,000Tax-exempt interest income 15,000Total income $11,070,000Expenses:Depreciation $ 800,000Bad debts 625,000Charitable contributions 40,000Interest 455,000Meals and entertainment 60,000Other 4,675,000Total expenses) (6,655,000)Net income before federal income taxes $ 4,415,000Cash $ 2,125,000Accounts receivable $ 3,300,000Allowance for doubtful accounts (450,000) 2,850,000Inventory 6,000,000Fixed assets $10,000,000Accumulated depreciation (1,600,000) 8,400,000Investment in corporate stock 1,000,000Investment in tax-exempt bonds 50,000Total assets $20,425,000Accounts payable $ 2,120,000Long-term debt 8,500,000Common stock 6,000,000Retained earnings 3,805,000$20,425,000Additional information for 2010:• Depreciation for tax purposes is $2.45 million under MACRS.• Bad debt expense for tax purposes is $425,000 under the direct writeoff method.• Qualified production activities income is $3 million.Required for 2010:a. Prepare page 1 of the 2010 Form 1120, computing the corporation’s taxable income and tax liability.b. Determine the corporation’s deferred tax asset and deferred tax liability situation, and then complete the income statement and balance sheet to reflect proper GAAP accounting ASC 740. Use the balance sheet information to prepare Schedule L of the 2010 Form 1120.c. Prepare the 2010 Schedule M-3 for Form 1120.d. Prepare a schedule that reconciles the corporation’s effective tax rate to the statutory 34% tax rate.I got your message and it’s alright, no problem. I can give you extra days till Friday to work on my problem. Thanks KB
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