Freda's Florist reported the following before-tax income statement items for the year ended December 31,2016:

All income statement items are subject to a 40% income tax rate.In its 2016 income statement,Freda's separately stated income tax expense and total income tax expense would be:

Question

Freda's Florist reported the following before-tax income statement items for the year ended December 31,2016:

All income statement items are subject to a 40% income tax rate.In its 2016 income statement,Freda's separately stated income tax expense and total income tax expense would be:

Quizplus · Accepted Answer

The income tax rate is 40%, so income tax expense can be calculated as 40% of income before taxes. 
Income tax expense = 0.4 x ($320,000 - $80,000 + $10,000) 
Income tax expense = $100,000

The question asks for separately stated income tax expense (which is income tax expense shown on the income statement) and total income tax expense (which is the actual income tax paid or payable during the year). Since income tax expense is a before-tax item, it is added to income tax payable to arrive at total income tax expense. 
Separately stated income tax expense = $100,000 
Total income tax expense = $100,000 + $28,000 = $128,000

Therefore, the correct choice is (C) $100,000 and $128,000, respectively.

Freda's Florist Reported the Following Before-Tax Income Statement Items for the Year