Southern Atlantic Distributors began operations in January 2016 and purchased a delivery truck for $40,000....
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Southern Atlantic Distributors began operations in January 2016 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2016, 30% in 2017, and 20% in 2018. Pretax accounting income for 2016 was $300,000, which includes interest revenue of $40,000 from municipal bonds. The enacted tax rate is 40%. Assuming no differences between accounting income and taxable income other than those described above Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.) Tax Rate % | | Tax | Recorded as: Pretax accounting income Permanent difference Income subject to taxation Temporary difference Income taxable in current year $ 300
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