70.2K

Verified Solution

Link Copied!

You have been assigned to compute the income tax provision for Herky Corporation. The

company's income statement for $2024$ is as follows:

Herky Corporation

Income Statement

Year ended $\frac{12}{31}\frac{?}{2024}$

You have identified the following:

Interest from municipal bonds $1,684,000$

Dividend Received Deduction $,3,700,000$ Herky Corporation prepared the following schedule of temporary differences from the beginning of the year to the end of the year.

Herky Corporation

Temporary Difference Scheduling Template

$\backslash$table$[[\backslash$table$[[$Taxable Temp$],[$Differences$]],\backslash$table$[[$BOY$],[$Cumulative$],[$T$/$D$]],\backslash$table$[[$Beginning$],[$Deferred$],[$Taxes @$,],[21\%]],\backslash$table$[[$Current$],[$Year$],[$Change$]],\backslash$table$[[$EOY$],[$Cumulative$],[$T$.$D$.]],\backslash$table$[[$Ending$],[$Deferred$],[$Taxes$],[$@$21\%]]],[\backslash$table$[[$Accumulated$],[$Depreciation$]],(8,340,000),(1,751,400),152,000,(8,188,000),(1,719,480)],[$Total$,(8,340,000),(1,751,400),152,000,(8,188,000),(1,719,480)],[\backslash$table$[[$Deductible$],[$Temporary$]],\backslash$table$[[$BOY$],[$Dumulative$],[$T$/$D$]],\backslash$table$[[$Beginning$],[$Deferred$],[$Taxes @$],[21\%]],\backslash$table$[[$Current$],[$Year$],[$Change$]],\backslash$table$[[$EOY$],[$T$.$D$.]],\backslash$table$[[$Ending$],[$Deferred$],[$Taxes$],[$@$21\%]]],[\backslash$table$[[$Allowance for$],[$Bad Debts$]],135,000,28,350,43,100,178,100,37,401],[\backslash$table$[[$Accrued$],[$Warranties$]],1,200,000,252,000,50,000,1,250,000,262,500],[\backslash$table$[[$Charitable$],[$Contributions$]],14,000,2,940,15,000,29,000,6,090],[\backslash$table$[[$Deferred$],[$Compensation$]],837,000,175,770,251,000,1,088,000,228,480],[$Total$,2,186,000,459,060,359,100,2,545,100,534,471]]$

Required:

Compute the current income tax expense or benefit for Herky assuming a $21\%$ tax rate.

Compute Herky's deferred income tax expense or benefit.

Prepare a reconciliation of Herky's total income tax provision with its hypothetical income tax expense in both dollars and rates $($compute the rate to the nearest hundredth of a percent $($e$.$g$.,17\mathrm{.}24\%).$

Assume Herky's tax rate for the current year increased to $23\%.$ Re$-$compute Herky's deferred income tax expense or benefit for $2024$ using the template on the following page. Herky Corporation

Temporary Difference Scheduling Template

$\backslash$table$[[\backslash$table$[[$Taxable Temp$],[$Differences$]],\backslash$table$[[$BOY$],[$Cumulative$],[$T$/$D$]],\backslash$table$[[$Beginning$],[$Deferred$],[$Taxes @$],[21\%]],\backslash$table$[[$Current$],[$Year$],[$Change$]],\backslash$table$[[$EOY$],[$Cumulative$],[$T$.$D$.]],\backslash$table$[[$Ending$],[$Deferred$],[$Taxes$],[$@$23\%]]],[\backslash$table$[[$Accumulated$],[$Depreciation$]],(8,340,000),(1,751,400),152,000,(8,188,000),],[$Total$,(8,340,000),(1,751,400),152,000,(8,188,000),],[\backslash$table$[[$Deductible$],[$Temporary$],[$Differences$]],\backslash$table$[[$BOY$],[$Cumulative$],[$T$/$D$]],\backslash$table$[[$Beginning$],[$Deferred$],[$Taxes @$],[21\%]],\backslash$table$[[$Current$],[$Year$],[$Change$]],\backslash$table$[[$Cumulative$],[$T$.$D$.]],\backslash$table$[[$Deferred$],[$Taxes$],[$@$23\%]]],[\backslash$table$[[$Allowance for$],[$Bad Debts$]],135,000,28,350,43,100,178,100,],[\backslash$table$[[$Accrued$],[$Warranties$]],1,200,000,252,000,50,000,1,250,000,],[\backslash$table$[[$Charitable$],[$Contributions$]],14,000,2,940,15,000,29,000,],[\backslash$table$[[$Deferred$],[$Compensation$]],837,000,175,770,251,000,1,088,000,],[$Total$,2,186,000,459,060,359,100,2,545,100,]]$You have been assigned to compute the income tax provision for Herky Corporation. The

company$$s income statement for $2024$ is as follows:.

$1.$ Compute the current income tax expense or benefit for Herky assuming a $21\%$ tax rate.

$2.$ Compute Herky$$s deferred income tax expense or benefit.

$3.$ Prepare a reconciliation of Herky$$s total income tax provision with its hypothetical

income tax expense in both dollars and rates $($compute the rate to the nearest hundredth of

a percent $($e$.$g$.,17\mathrm{.}24\%)).$

$4.$ Assume Herky$$s tax rate for the current year increased to $23\%.$ Re$-$compute Herky$$s

deferred income tax expense or benefit for $2024$ using the template on the following

page.

Show all imagesShow all images

Answer & Explanation Solved by verified expert

See Answer