Denver Company,a calendar-year corporation,had the following actual income before income tax expense and estimated effective annual income tax rates for the first three quarters in 20X8:
Denver's income tax expense in its interim income statement for the third quarter should be:
A)$126,000.
B)$68,400.
C)$62,400.
D)$54,000.

Question

Quizplus · Accepted Answer

The estimated effective annual income tax rate for the first three quarters can be calculated as follows:
[(Q1 income tax expense / Q1 income before income tax) + (Q2 income tax expense / Q2 income before income tax) + (Q3 income tax expense / Q3 income before income tax)] / 3
= [(42,000 / 210,000) + (60,600 / 303,000) + (X / 280,000)] / 3
Solving for X, we get:
X = 68,400
Therefore, the income tax expense for the third quarter should be $68,400. The correct answer is B.

Denver Company,a Calendar-Year Corporation,had the Following Actual Income Before Income