Millstone Company's First-Quarter 2018, Pretax Income Is $25,000 The Effect of the Change on Prior Years Is a an Annual

Essay

Millstone Company's first-quarter 2018, pretax income is $25,000.The company anticipates an annual tax credit of $5,500.Millstone is projecting income for the remaining three quarters of $95,000.For the second quarter of 2019, Millstone reports $55,000 of pretax income with a projected pre-tax income for the remainder of the year of $65,000.Millstone does not have any permanent differences between taxable income and financial income.
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In the second quarter, Millstone decided to change their depreciation method used for financial reporting purposes.The change in depreciation methods has the following effect on the calculation and projection of income for Millstone:
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$$\begin{array} { r r r } & \text { Actual Income } & \text { Frojected Remainder } \\\text { Qtr1 } & 20,000 & 85,000 \\\text { Qtr2 }& 55,000 & 65,000\end{array}$$
The effect of the change on prior years is a decrease to retained earnings of $30,000.
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The current tax schedule is:
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$$\begin{array} { l l } \$ 1 - \$ 100,000 & 15 \% \\\$ 100,001 - 200,000 & 22 \% \\\$ 200,001 - 460,000 & 28 \% \\\$ 460,001 \text { and above } & 30 \%\end{array}$$ Required:
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Calculate the first and second quarter interim tax expenses on continuing income.