1. LESSON 14-6 Calculating Federal Income Tax and Completing a Work Sheet
4/23/2017
LESSON 14-6
Calculating Federal Income Tax and Completing a Work Sheet

2. Calculating Federal Income Tax
Corporations anticipating annual federal income taxes of $500 or more are required to pay their estimated taxes each quarter
The actual federal income tax owed is calculated at the end of a fiscal year
Federal income tax is an expense of a corporation. However, the amount of tax depends on net income before the tax is recorded.
Before making adjustments to federal income tax, businesses must first determine the net income BEFORE federal income tax expense
LESSON 14-6

3. FEDERAL INCOME TAX EXPENSE ADJUSTMENT
page 427
Complete all other adjustments on a work sheet
Extend all amounts except Federal Income Tax Expense to the Income Statement or Balance Sheet columns
On a separate sheet of paper, total the worksheet’s Income Statement columns
Calculate the difference between the Income Statement Debit & Credit column totals. This is the net income before federal income tax expense
Total of Income Statement Credit column $ 500,253.10
Less total of Income Statement Debit column before federal income tax –396,049.91
Equals Net Income before Federal Income Tax $ 104,203.19
LESSON 14-6

4. CALCULATING FEDERAL INCOME TAX
page 428
The amount of federal income tax expense a corporation must pay is calculated using a tax rate table furnished by the Internal Revenue Service.
LESSON 14-6

5. RECORDING THE FEDERAL INCOME TAX ADJUSTMENT
page 429 1 3 2
1. Calculate the amount of federal income tax expense adjustment.
2. Total and rule the Adjustments columns.
3. Extend account balances.
LESSON 14-6

6. COMPLETING A WORK SHEET
page 430 1 2 3 4 5
1. Total the Income Statement and Balance Sheet columns.
2. Calculate and enter the net income after federal income tax.
3. Extend the net income amount.
4. Calculate the column totals.
5. Rule double lines.
LESSON 14-6

7. A COMPLETED 8-COLUMN WORK SHEET
page 432
LESSON 14-6

8. A 10-COLUMN WORK SHEET 1 2 3 5 4 6 1. Trial balance 5. Extend balances
page 1 2 3 5 4 6
1. Trial balance
5. Extend balances
2. Adjustments
6. Calculate net income; total, prove and rule
3. Extend adjusted balances
4. Total, prove, and rule
LESSON 14-6