For the year ended December 31, 2013, Fidelity Engineering reported pretax accounting income of $977,000. Selected information for 2013 from Fidelity's records follows:
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|
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| Interest income on municipal bonds |
$ |
32,000 |
| Depreciation claimed on the 2013 tax return in excess of depreciation on the income statement |
|
55,000 |
| Carrying amount of depreciable assets in excess of their tax basis at year-end |
|
85,000 |
| Warranty expense reported on the income statement |
|
26,000 |
| Actual warranty expenditures in 2013 |
|
16,000 |
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Fidelity's income tax rate is 40%. At January 1, 2013, Fidelity's records indicated balances of zero and $12,000 in its deferred tax asset and deferred tax liability accounts, respectively.
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| Required: |
| 1. |
Determine the amounts necessary to record income taxes for 2013 and prepare the appropriate journal entry.
| 2. |
What is Fidelity's 2013 net income?
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