You are the new controller for GO CORPORATION. This is GO’s first year of operations and everything went much better than anyone anticipated. It went so well, that your pre-tax profits for the year were $5,000,000. Unfortunately, no one bothered to pay any income taxes (federal or state) for the whole year because they were all so busy growing the business and never thought they were making a GAAP profit. The CFO has put you in charge of calculating and accounting for all of the income tax balances, including the balance sheet and income statement amounts. Not knowing where to start, you began by looking at the trial balance (post-adjusting entries with the exception of the tax entries). You found, as suspected, that there are no income tax accounts on the trial balance, which means you have to create them all somehow by tomorrow afternoon. After a bit of reflection and a review of the trial balance, you have found the following information which you think, but are not sure, is relevant. You then call your sister who happens to be a CPA for help. After agreeing on a fee of $900/hour, she agrees to come help you that evening.

Leave a Reply