Question 1: Dodger Corporation reported a loss for both financial reporting purposes and tax reporting purposes of $231,000 in 2011. For financial reporting purposes, Dodger reported income before taxes for years 2008-2010 as listed below:
2008 ............................ $ 66,000
2009 ............................ 99,000
2010 ............................ 132,000
Assuming Dodger's tax rate is 30 percent in all periods, and that the company uses the carryback provisions, what amount should appear in Dodger's statements for financial reporting purposes as a net loss in 2011?
a. $0
b. $69,300
c. $161,700
d. $234,300
Question 2: In 2011 Taggart Inc. reported pretax financial income of $750,000. Included in that pretax financial income was $80,000 of nontaxable life insurance proceeds received as a result of the death of an officer; $100,000 of warranty expenses accrued but unpaid as of December 31, 2011; and $40,000 of life insurance premiums for a policy for an officer. Assuming that no income taxes were previously paid during the year and assuming an income tax rate of 35 percent, the amount of income taxes payable on December 31, 2011, would be:
a. $255,500.
b. $283,500.
c. $311,500.
d. $213,500.