Amelia, Inc Amelia, Inc Amelia, Inc

Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year.Assume a 34% corporate tax rate and no valuation allowance.

$\begin{array}{lcc}&\text { Tax Debit/(Credit) }&\text {Book Debit/(Credit) }\\\text { Assets }\\\text { Cash } & \$ 1,200 & \$ 1,200 \\\text { Accounts Receivable } & 20,000 & 20,000 \\\text { Buildings } & 1,200,000 & 1,200,000 \\\quad \text { Accumulated Depreciation } & (600,000) & (320,000) \\\text { Furniture \& Fixtures } & 160,000 & 160,000 \\\quad \text { Accumulated Depreciation } & \underline{(84,000)} & \underline{(60,000)} \\\text { Total Assets } & \underline{\underline{\$ 697,200}} & \underline{\underline{\$ 1,001,200}}\\\\\text { Liabilities }\\\text { Accrued Vacation Pay } & \$-0- & (\$ 108,000) \\\text { Note Payable } & \underline{(464,000)}& \underline{(464,000) }\\\text { Total Liabilities } & \underline{(\$ 464,000)} & \underline{(\$ 572,000)}\\\\\text { Paid in Capital } & (\$ 4,000) & (\$ 4,000) \\\text { Retained Earnings } & \underline{(229,200)} & \underline{(425,200)} \\\text { Total Liabilities and } \text { Stockholders' Equity } & \underline{ \underline{(\$ 697,200)}} & \underline{\underline{(\$ 1,001,200)}} \\\end{array}$


Amelia, Inc.’s, gross deferred tax assets and liabilities at the beginning of Amelia’s year are listed below.
$$\begin{array} { l r } & \text { Beginning of Year } \\\text { Accrued Vacation Pay } & \$ 84,000 \\\text { Subtotal } & \$ 84,000 \\\text { Applicable Tax Rate } & \times 34 \% \\\text { Gross Deferred Tax Asset } & \$ 28,560 \\\text { Building - } & ( \$ 244,000 ) \\\quad \text { Accumulated Depreciation } & \\\text { Furniture \& fixtures - } & ( 12,800 ) \\\quad \text { Accumulated Depreciation } & \\\text { Subtotal } & ( \$ 256,800 ) \\\text { Applicable tax rate } & \times 34 \% \\\text { Gross deferred tax liability } & \underline { ( \$8 7,312 ) } \\\end{array}$$
Amelia, Inc.’s, book income before tax is $25,200. Amelia records two permanent book-tax differences.
It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and
entertainment expense. Provide the income tax footnote rate reconciliation for Amelia, using either dollars or percentages.