The estimated taxable income for Shebill Corporation on January 1,2014,was $80,000,$100,000,$100,000 and $120,000,respectively,for each of the four quarters of 2014.Shebill's estimated annual effective tax rate was 30%.During the second quarter of 2014,the estimated annual effective tax rate was increased to 34%.Given only this information,Shebill's second quarter income tax expense was
A)$30,000.
B)$34,000.
C)$37,200.
D)$61,200.

Question

Quizplus · Accepted Answer

To calculate the income tax expense for the second quarter, we need to determine the taxable income for the first and second quarters separately.

For the first quarter, the estimated taxable income was $80,000, so the income tax expense would be:

$80,000 x 30% = $24,000

For the second quarter, the estimated taxable income was $100,000, and the effective tax rate was increased to 34%, so the income tax expense would be:

$100,000 x 34% = $34,000

To calculate the total income tax expense for the first half of the year, we add the income tax expenses from the first and second quarters:

$24,000 + $34,000 = $58,000

Since the annual effective tax rate for the last two quarters was 30%, we can assume that the income tax expense for the third and fourth quarters would be the same as in the first quarter, which was $24,000.

Therefore, the total income tax expense for the year would be:

($24,000 x 3) + $34,000 = $106,000

So Shebill's second quarter income tax expense was $34,000.

The Estimated Taxable Income for Shebill Corporation on January 1,2014,was