William Corporation,which has a fiscal year ending January 31,had the following pretax accounting income and estimated effective annual income tax rates for the first three quarters of the year ended January 31,20X8: William's income tax expenses in its interim income statement for the third quarter are:
A) $36,000.
B) $73,500.
C) $46,500.
D) $120,000.

Question

William Corporation,which has a fiscal year ending January 31,had the following pretax accounting income and estimated effective annual income tax rates for the first three quarters of the year ended January 31,20X8:  William's income tax expenses in its interim income statement for the third quarter are:
A) $36,000. 
B) $73,500. 
C) $46,500. 
D) $120,000.

Quizplus · Accepted Answer

To calculate the income tax expense for the third quarter, we need to determine the pre-tax income for the third quarter and then multiply it by the estimated effective annual income tax rate for the year.

From the information given in the question, we only have the pretax accounting income and estimated effective annual income tax rates for the first three quarters of the year. We can use this information to determine the pre-tax income for the third quarter as follows:

Pre-tax income for Q1 + Pre-tax income for Q2 + Pre-tax income for Q3 = Pretax accounting income for first three quarters

Let X be the pre-tax income for Q3. We can then set up an equation:

$60,000 + $85,000 + X = $270,000

Solving for X, we get:

X = $125,000

Now, to calculate the income tax expense for the third quarter, we need to multiply the pre-tax income for the quarter ($125,000) by the estimated effective annual income tax rate for the year (37.2%):

Income tax expense for Q3 = $125,000 x 37.2% = $46,500

Therefore, the correct answer is C.

William Corporation,which Has a Fiscal Year Ending January 31,had the Following