Problem - At the end of its first year of operations on Dec 31, 2014, the Odessa Company reported pretax financial income of $240,000.
In arriving at taxable income for income tax purposes, the following items were identified as relevant to the tax position. Assume tax assets are considered more likely than not to be realized.
Bad debt expense for financial statements - $24,000
Bad debts written off for tax purposes - $5,000
Officers life insurance premium expense - $8,000
MACRS depreciation on the tax return exceeds
Depreciation for financial reporting purposes - $44,000
Interest Income on municipal bonds of was received in 2014 - $5,000
The enacted corporate income tax rate for all years is - 30%
Required:
a) Compute taxable income.
b) Prepare the journal entries to record income tax expense and any related deferred tax assets and liabilities for 2014.
c) What is the total amount of income tax expense for financial reporting in 2014?