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I am having difficulty figuring out the taxable income and the calculations are not equaling. Will someone please help?

Your tax senior has e-mailed you Oh Gnome You Didn't, Inc.'s GAAP-basis trial balance and

financial statements for the 2018 calendar year, prepared using Microsoft Excel, and has asked

you to convert Gnome's book income into taxable income within the same Excel workbook.

The Excel workbook contains pre-formatted tabs you'll need to complete to properly calculate

taxable income.

Your tax senior has also asked you to prepare Form 1120, Schedule M-3 for Gnome once you

have finished computing taxable income.

Step 1 - Taxable Income Calculation using Microsoft Excel

b. Hint - you will need to use the "Trial Balance" tab to help you determine the

correct "Acct. Number" for the applicable cells.

a. The accuracy checkpoint should show a variance within +/- 1.0 (cell C30).

Step 2 - Preparation of Schedule M-3 (Form 1120)

Your tax senior has also asked you to prepare Form 1120, Schedule M-3 for Gnome once you

have finished computing taxable income.

1. Access a fill-able version of Schedule M-3 at the following site:

https://www.irs.gov/pub/irs-pdf/f1120sm3.pdf

2. Download the form to your hard drive

Account Number 100 Cash 105 Accounts Receivable Jan. 1, 2018 Dec. 31, 2018 Account Name Balance 632,673 345,200 (13,427) 6,000 8,000 100,000 Total Cash Per SOCF Variance 632,673 1,850,000 (1,217,32 Allowance for Doubtful Accounts Interest Receivable 120 Prepaid Property Taxes 125 Long-term Investment - Municipal Bond 130 Furniture & Fixtures 135 Accumulated Depreciation Furniture & Fixtures 0 140 Equipment- Gnome 145 (9,000) 130,000 (32,500) 690,000 100,625) 657,000 378,000 (94,827) 11,000) (10,000) Accumulated Depreciation-Equipment- Gnome Equipment- Duck ck0 160 165 170 200 220 Goodwill Intangibles- Non-goodwill Accumulated Amortization Accounts Payable Accrued Salaries and Wages Payable Accrued Payroll Taxes Total Assets Per Balance Sheet Variance 2,741,494 657,000 2,084,494 230 Accrued Interest-Bank Loan 235 Accrued Charitable Contributions 240 Federal Income Tax Payable 245 State Income Tax Payable 250 Long-term Note Payable Bank Loan 255 Deferred Tax Liability (64,000) (20,500) (33,986) (34,182) (1,600,000) (134,335) (2,000) Total Liabilities (1,908,768) Per Balance Sheet Variance 0 (1,908,768) Common Stock 16 17 A and B Sheet3 Sheet4 Account Number 100 Cash 105 Accounts Receivable Jan. 1, 2018 Dec. 31, 2018 Account Name Balance 632,673 345,200 (13,427) 6,000 8,000 100,000 Total Cash Per SOCF Variance 632,673 1,850,000 (1,217,32 Allowance for Doubtful Accounts Interest Receivable 120 Prepaid Property Taxes 125 Long-term Investment - Municipal Bond 130 Furniture & Fixtures 135 Accumulated Depreciation Furniture & Fixtures 0 140 Equipment- Gnome 145 (9,000) 130,000 (32,500) 690,000 100,625) 657,000 378,000 (94,827) 11,000) (10,000) Accumulated Depreciation-Equipment- Gnome Equipment- Duck ck0 160 165 170 200 220 Goodwill Intangibles- Non-goodwill Accumulated Amortization Accounts Payable Accrued Salaries and Wages Payable Accrued Payroll Taxes Total Assets Per Balance Sheet Variance 2,741,494 657,000 2,084,494 230 Accrued Interest-Bank Loan 235 Accrued Charitable Contributions 240 Federal Income Tax Payable 245 State Income Tax Payable 250 Long-term Note Payable Bank Loan 255 Deferred Tax Liability (64,000) (20,500) (33,986) (34,182) (1,600,000) (134,335) (2,000) Total Liabilities (1,908,768) Per Balance Sheet Variance 0 (1,908,768) Common Stock 16 17 A and B Sheet3 Sheet4

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