Question

please refer to the question posted below. please prepare an income statement based on facts provided. there is a template provided of to formulate it.

2.000 (27) For the current year, accrual refected the following: Net income per books $104,000 Accrued federal income tax 35,000 Net capital loss 4,000 Tax exempt interest 5.000 Book depreciation in excess of alowable tax depreciation Based on the above facts, what is the amount of A's taxable income? A. $69.000 B. $70,000 C. $140.000 D. $150,000 The correct answer is c. A. Federal income tax is added to, not subtracted from, book net income. Also, the net capital loss and excess book depreciation must be added back, and tax exempt interest income must be subtracted B. Federal income taxes are not subtracted, they are added back to book net income. C. Federal income tax, excess capital losses, and book depreciation in excess of tax depreciation are not deductible. These amounts must be added back to book income. Tax- exempt interest is not taxable and must be subtracted from book income. These adjustments done on Schedule M-1 of the corporation tax retum. Net income per books $104,000 Add back Federal income tax 35.000 Net capital loss Excess book depreciation 2.000 $145,000 Subtract Tax exempt interest (5,000) $140.000 D. The tax exempt interest is not added back tis subtracted from book net in 4.000 incos

Answer 1

Sales Revenue	140000
Cost of goods sold	0
Gross profit	140000
Operating expenses
Depreciation expense	2000
Operating income	138000
Other revenue
Net capital loss	-4000
Interest Revenue	5000
Income before taxes	139000
Income Tax expense	35000
Net income	104000