Reference no: EM133171560

Question - The following data represents the difference between accounting and tax income for seafood imports Inc. Whose pre-tax accounting income is $750,000 for the year ended December 31. The company's income tax rate is 45%. Additional information relevant to income taxes including the following.

A. Capital cost allowance of $270,000 exceeded accounting depreciation expense of $150,000 in the current year.

B. Rents of $30,000, applicable to next year had been collected in December and deferred for financial statement purposes but are taxable in the year achieved.

C. In a previous year the company established a provision for product Warrenty expense. A summary of the current year's transactions appear below.

i. Warranty expense for the year 42,500

ii. Payments made to fulfill warranty of products 35,000

D. Insurance expense to cover company's executive officers was $7,000 for the year.

Required -

1. Calculate the taxable income with explanation

2. Provide and explain all journal entries to record income taxes for seafood imports with proper formatting.