Taylor Company began manufacturing operations on January 2, 2015. During 2015 Taylor earned pre-tax book income of $150,000 and had taxable income of $200,000. Taylor had a temporary difference relating to accrued product warranty costs that are expected to be paid as follows:
$$\begin{array} { l r }
2016 & \$ 30,000 \
2017 & \$ 15,000 \
2018 & \$ 5,000
\end{array}$$
-If Taylor paid no estimated taxes,the income tax payable at the end of 2015 is

Question

Taylor Company began manufacturing operations on January 2, 2015. During 2015 Taylor earned pre-tax book income of $150,000 and had taxable income of $200,000. Taylor had a temporary difference relating to accrued product warranty costs that are expected to be paid as follows:
$$\begin{array} { l r } 
2016 & \$ 30,000 \
2017 & \$ 15,000 \
2018 & \$ 5,000
\end{array}$$
-If Taylor paid no estimated taxes,the income tax payable at the end of 2015 is

Quizplus · Accepted Answer

The income tax payable is calculated based on the taxable income. Since Taylor had a taxable income of $200,000 and assuming a tax rate of 30% (a common corporate tax rate), the income tax payable would be $200,000 * 30% = $60,000. The temporary differences and the timing of the warranty costs do not affect the calculation of income tax payable for 2015.

Taylor Company Began Manufacturing Operations on January 2, 2015 2016$30,0002017$15,0002018$5,000\begin{array} { l r } 2016 & \$ 30,000 \\2017 & \$ 15,000 \\2018 & \$ 5,000\end{array}201620172018​$30,000$15,000$5,000​

Taylor Company Began Manufacturing Operations on January 2, 2015 $\begin{array} { l r } 2016 & \$ 30,000 \\2017 & \$ 15,000 \\2018 & \$ 5,000\end{array}$