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EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its...

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Accounting

EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporations financial records reveal the following information:

  • EFG earned $10,700 on an investment in tax-exempt municipal bonds.
  • EFGs allowance for bad debts as of January 1 was $21,000. Write-offs for the year totaled $4,400, while the addition to the allowance was $3,700. The allowance as of December 31 was $20,300.
  • On August 7, EFG paid a $6,000 fine to a municipal government for a violation of a local zoning ordinance.
  • EFGs depreciation expense per books was $44,200, and its MACRS depreciation deduction was $31,000.
  • This is EFGs second taxable year. In its first taxable year, it recognized an $8,800 net capital loss. This year, it recognized a $31,000 Section 1231 gain on the sale of equipment. This was EFGs only disposition of noninventory assets.
  • In its first taxable year, EFG capitalized $6,900 organizational costs for tax purposes and elected to amortize the costs over 180 months. For book purposes, it expensed the costs.
  • EFGs federal income tax expense per books was $151,000.

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