All of the accounts of the Grass is Greener Company have been adjusted as of December 31, 2018, with the exception of income taxes incurred but not yet recorded. Those account balances appear below. All have normal balances. The estimated income tax rate for the company is 40%. Cash$351,340Accounts Receivable 753,950Interest Receivable 4,300Prepaid Insurance 6,800Prepaid Rent 11,200Supplies 216,900Equipment 672,500Accumulated Depreciation 128,900Accounts Payable 281,700Deferred Revenue 83,600Income Tax Payable 0Salaries and Wages Payable 23,400Notes Payable (long-term) 356,040Long-Term Debt 229,600Common Stock 380,600Retained Earnings 207,400Dividends 20,000Service Revenue 904,000Interest Revenue 114,100Supplies Expense 336,200Repairs and Maintenance
Expense 247,900Depreciation Expense 57,750Rent Expense 30,500Income Tax Expense UnknownRequired:a. Calculate the income before income tax. b. Calculate the income tax expense. c. Calculate the net income.
What will be an ideal response?
a, b, and c.
| Revenues | ||||||
| Service Revenue | $ | 904,000 | ||||
| Interest Revenue | 114,100 | $ | 1,018,100 | |||
| Expenses | ||||||
| Supplies Expense | 336,200 | |||||
| Repairs and Maintenance Expense | 247,900 | |||||
| Depreciation Expense | 57,750 | |||||
| Rent Expense | 30,500 | 672,350 | ||||
| Adjusted Income before Income Tax | 345,750 | |||||
| Income Tax Expense ($345,750 × 0.40) | 138,300 | |||||
| Net Income | $ | 207,450 | ||||
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