Bodner Corporation's income statement for the year ended December 31,2014,shows pretax income of $1,000,000.The following items are treated differently on the tax return and in the accounting records: Assume that Bodner's tax rate for 2014 is 30 percent.What is the amount of income tax payable for 2014?

Question

Bodner Corporation's income statement for the year ended December 31,2014,shows pretax income of $1,000,000.The following items are treated differently on the tax return and in the accounting records:  Assume that Bodner's tax rate for 2014 is 30 percent.What is the amount of income tax payable for 2014?

Quizplus · Accepted Answer

Since the question asks for income tax payable, we need to calculate the actual amount of tax that Bodner owes to the government for the year. To do this, we need to calculate the taxable income. Since some items are treated differently for tax and accounting purposes, we need to identify those items and make necessary adjustments. Assuming that the items mentioned in the question are the only ones that need adjustment, here is the calculation:
Pretax income = $1,000,000
Add: Expenses disallowed for tax purposes = $100,000
Deduct: Tax-exempt income = $50,000
Taxable income = $1,050,000 - $100,000 + $50,000= $1,000,000
Income tax payable = Taxable income × Tax rate = $1,000,000 × 0.3 = $294,000
Therefore, the correct answer is C.

Bodner Corporation's Income Statement for the Year Ended December 31,2014,shows