The following information has been obtained from the internal financial records of MTM Company:
The company’s tax rate is 35 percent. Assume that financial accounting income equals income for tax purposes.
a. What is the company’s net income for the year ended December 31, 2012?
b. Compute income tax expense reported in MTM’s 2012 income statement.
c. Prepare a reconciliation of retained earnings for the year ended December 31, 2012.
d. Assume that the income tax liability account had a balance of $70,000 on January 1, 2012, and that tax payments of $200,000 were made during 2012. What should be the balance in this account on December 31, 2012?
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