Question

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $300,000 Permanent difference (15,000 ) 285,000 Temporary difference-depreciation (20,000 ) Taxable income $265,000 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as income tax payable for its first year of operations?

Answer 1

If no estimated taxes have been paid. the amount that Tringali will report as income tax payable for its first year of operations is $71,250.

Income tax payable

Using this formula

Income tax payable=(Taxable incomex Tax rate)+Temporary difference depreciation

Let plug in the formula

Income tax payable=($265,000 x 25%)+($20,000×25%)

Income tax payable=$66,250+$5.000

Income tax payable=$71,250

Inconclusion  the amount that Tringali will report as income tax payable for its first year of operations is $71,250.

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