Answer in Accounting for Willy #163937
Dunn Company reported P900,000 income before provisions for income tax during the current year.
To compute the provision for income tax, the following data are provided:
Rent received in advance——————————————————-150,000
Interest income on time deposit (permanent difference) —————200,000
Depreciation deducted for income tax purposes in excess of depreciation for financial statement purposes —————————————————————————100,000
Estimated tax payment in the current year ——————————–125,000
Income tax rate————————————————————————-30%
What amount of income tax payable should be reported at year-end?
a. 125,000
b. 100,000
c. 210,000
d. 225,000
Answer
Calculation of taxable income
Taxable income = Reported Income + Rent received in advance – Interest Income – Excess depreciation
Taxable income = 900000 + 150000 – 200000 – 100000
Taxable income = 750,000
Calculation of tax and tax payable
Tax on taxable income = Taxable income * Tax rate
Tax on taxable income =750,000 * 30%
Tax on taxable income = 225000
Tax payable reported at the end of year = 225,000
