Company C had the following investment. Help them determine the financial statement implications of the investment. Tax rate 21% Estimated tax payment 21,000 Investment cost and ending fair values for 20X1 and 20X2: 20X1 20X2 Cost 100,000 100,000 Fair value 110,000 134,000 Total gain 10,000 34,000 20X1 income statement information: Sales 1,670,200 Expenses 1,536,600 Assuming the investement is short-term, what is the ending balance of taxes payable on the 20X1 balance sheet?

Question

contestada

Respuesta :

Tundexi Tundexi · Answer 1 · 2021-02-04T01:08:42+01:00

Answer:

$9,156

Explanation:

Income = (Sales-expenses) + $10,000

Income = ($1,670,200 - $1,536,600) + $10,000

Total income = $143,600

Tax = Income * Tax Rate = $143,600 * 0.21 = $30,156

Now, total taxes payable is $30,156,but they estimated that payment to be $21,000, So company C has reserved $21,000 for future tax payments

So, Net deferred tax payable = $30,156 - $21,000 = $9,156. Therefore, ending balance of taxes payable on the 20X1 balance sheet is $9,156.