You have decided to start a business selling pet toys. You form a corporation, Happy Pets, Inc. You (the shareholder) paid $100 per share for 5,000 shares of stock on January 1, 20X0. The company borrowed $75,000 from the bank. The note says the company agrees to pay back that amount on December 31, 20X5 and the interest rate is 10%. The company bought 60,000 toys for $3 each. It sold 40,000 toys for $8 each. The company also paid wages of $50,000, advertising expense of $2,000, and rent, $12,000, and paid the interest. The company bought a delivery van on December 31st that cost $20,000 paying cash for the total amount. On July 1 the company sold another 1,000 shares of stock for $100 each. On December 31 the company paid a $10,000 dividend. At the end of the year the company owed its employees $2,000. The tax rate is 30% and the taxes were paid in 20X0. Prepare T accounts and financial stateme

Bridgeport company began operations at the beginning of 2018. the following information pertains to this company. 1. pretax financial income for 2018 is $115,000. 2. the tax rate enacted for 2018 and future years is 40%. 3. differences between the 2018 income statement and tax return are listed below: (a) warranty expense accrued for financial reporting purposes amounts to $7,500. warranty deductions per the tax return amount to $2,200. (b) gross profit on construction contracts using the percentage-of-completion method per books amounts to $94,700. gross profit on construction contracts for tax purposes amounts to $67,100. (c) depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. depreciation of these assets amounts to $75,700 for the tax return. (d) a $3,600 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. 4. taxable income is expected for the next few years. (assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) prepare the reconciliation schedule for 2017 and future years. (b) prepare the journal entry to record income tax expense for 2017. (c) prepare the income tax expense section of the income statement beginning with “income before income taxes.” (d) determine how the deferred taxes will appear on the balance sheet at the end of 2017.