A Broadcasting Company Failed to Make a Year-End Accrual of $400,000

A broadcasting company failed to make a year-end accrual of $400,000 for fines due to a violation of FCC rules. Its tax rate is 30%. As a result of this error, net income was:

A) Unaffected.
B) Overstated by $400,000.
C) Overstated by $280,000.
D) Overstated by $120,000.$400,000 (1 0%) = $400,000 Fines paid for violations of the law are not tax deductible.