Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
Gosling earned $3,500 on an investment in tax-exempt municipal bonds.
Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income.
Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000.
Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes.
Gosling's federal income tax expense per books was $220,000.
a. Compute Gosling's taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.

Question

Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
Gosling earned $3,500 on an investment in tax-exempt municipal bonds. 
Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income.
Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000. 
Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes. 
Gosling's federal income tax expense per books was $220,000. 
a. Compute Gosling's taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.

Quizplus · Accepted Answer

The Answer of Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
Gosling earned $3,500 on an investment in tax-exempt municipal bonds. 
Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income.
Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000. 
Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes. 
Gosling's federal income tax expense per books was $220,000. 
a. Compute Gosling's taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.