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Question
The Matrix Company began operations as of the beginning of 2012. During 2012, Matrix reported GAAP (book) income before taxes of $789,500. For income tax purposes, depreciation expense was $150,000; for GAAP (book) purposes, depreciation expense was $74,000. Matrix accrued $900,000 of revenue for GAAP (book) purposes during 2012; $600,000 of the accrued revenue was taxable during 2012. Matrix earned interest of $79,800 from a municipal bond investment during 2012. Matrix's marginal income tax rate is 40%. Matrix did not make any income tax payments during 2012.
Requirements:
1. Determine Matrix's taxable income for the year ended December 31, 2012.
2. Prepare the 2012 year-end journal entry to record income tax expense.
Answer
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