QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

50. Assume U.S. GAAP (generally accepted accounting principles) applies unless

otherwise noted.

A company reports net income of $800,000 for the year. The table below

indicates selected items which were included in net income and their associated

tax status.

Included in determining

Net Income Tax Status

Depreciation Expense $70,000 $90,000 allowed for tax purposes

Dividend Income $120,000 Dividends not taxable

Fine related to

environmental damage $100,000 Not deductible for tax purposes

R&D Expenditures $50,000 $20,000 allowed for tax purposes

The company’s tax rate is 35 percent. The company’s current income taxes

payable (in $) is closest to:

A. 206,500.

B. 276,500.

C. 360,500.

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