A reconciliation of pretax financial statement income to taxable income is shown below for Shaw-Anderson Industries for the year ended December 31, 2018, its first year of operations. The company offers quality-assurance warranties that extend six months after goods are purchased. The income tax rate is 40%.
Pretax accounting income (income statement) $ 640,000
Interest revenue on municipal securities (20,000)
Warranty expense in excess of deductible amount 45,000
Depreciation in excess of financial statement amount (120,000)
Taxable income (tax return) $ 545,000
What amount should Shaw-Anderson report as the current portion of income tax expense on its 2018 income statement?
a.$52,000
b.$218,000
c.$248,000
d.$256,000
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