$1.$ Prepare the correcting$/$adjusting entries:$$ Chapter $13($Warranties and Contingent Liability$)$ Chapter $20($Leases$)$ Chapter $18($Current Tax$)2.$ Post the entries from $(1)$ to the formatted excel spreadsheeton your Moodle site.$3.$ After you are done step $2,$ find the income before income tax expense on the excel spreadsheet LINE $22.4.$ To compute the correct income tax expense, use the income before tax expense amount from Step $3$ to start thereconciliation between accounting income and taxable income. $($Chapter $18).$ From the reconciliation, compute thecurrent income tax expense and prepare the journal entry.$5.$ Post the entry$($ies$)$ from Step $4$ to the excel spreadsheet so that the financial statements can be completed.$6.$ Find the net income on the excel spreadsheet LINE $24.$ Use this amount to start the calculation of the required EPS amounts $($Chapter $17).$ Once computed, show the Basic and Fully Diluted EPS amounts on the to the income statement.$7.$ Write a concise $2$ or $3-$page memo to the president as requested by him.

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EXHIBIT $1-$ SUMMARY OF SIGNFICANT ISSUES AND TRANSACTIONS

LaFontaine Automotive Class Cars Co$.$ was incorporated on May $1,1973.$The company was founded to sell high end automobiles to enthusiasts in the booming collector car market. To get a taste of the variety of beautiful cars, access the LaFontaine company's homepage. $[$Hold the CTRL key and click the underlined link.$]$ The company buys desirable automobiles, which are resold through online sales and inperson auctions. Capital financing during $2023$ was as follows:

i$.$ On January $1,2023$ the company became a public company by issuing $120,000$ common shares for $$50$ per share. On that date, $60,000$ warrants were issued, with each warrant permitting the owner to buy one common share for $$75$ before January $1,2028.$

ii$.$ During $2023,$ an additional $60,000$ common shares were issued on July $1,2023$ for $$55$ per share and $25,000$ cumulative, $$4$ convertible preferred shares were issued for $$100$ each. Each preferred share is convertible into $2$ common shares.

iii. A $$2,000,000,10-$year, $6\%$ convertible bond was issued on April $1,2023,$ with each $$1,000$ bond convertible into $15$ common shares.

iv$.$ Options were issued to employees on April $1,2023,$ permitted the holders to purchase $30,000$ common shares for $$50$ per share any time before April $1,2025.$

The company's tax rate is $20\%$ and the average market value of the common shares was $$90$ per share for the year ended December $31,2023.$

Larry insists that only premium vehicles are bought and sold. So confident is he in the quality of the cars sold, the company includes a complete $5-$year warranty. In addition, the customer has the option of paying for an extended $3-$year warranty for which the customer pays $10\%$ of the car's sales price. Estimated repair work under the $5-$year warranty coverage amounts to $5\%$ of the car's selling price. The following was recorded in $2023$ for the warranties:

$\backslash$table$[[$ACCOUNT$,$DEBIT,CREDIT$],[$Warranty expense,$125,000,],[$Cash$,,125,000],[$to record actual warranty repairs made under the basic,,$],[$Cash$,450,000,],[$Extended warranty revenue,,$450,000],[($to record amount received for the extended warranties$),,]]$

NOTE:

i$.$ For simplicity assume all car sales occurred evenly throughout the year.

ii$.$ Assume that extended warranties were purchased by customers on half of the total car sales revenue.

iii. FOR TAX PURPOSES: You remind yourself that warranties can only be deducted as an expense on the income tax return when the actual repair costs are incurred and not for the estimated future repair expense.

LaFontaine Automotive Class Cars Co$.$ entered into a $10-$year lease agreement on January $1,2023$ for its office and warehouse location. The company is required to make annual payments of $$100,000$ starting on January $1,2023,$ details of which are as follows:

i$.$ The land and buildings have a total fair value of $$808,100,$ split equally between the land and buildings. A real estate agent confirmed this value with Larry. Lafontaine has the option to purchase the leased assets at the end of the lease for $$50,000,$ less than the expected fair value of $$120,000.$ The buildings have a $20-$year useful economic life.

ii$.$ The implicit interest rate in the lease is $6\%.$ LaFontaine Automotive Class Cars has an incremental borrowing rate of $8\%.$

$\backslash$table$[[$ACCOUNT$,$DEBIT,CREDIT$],[$Rental expense,$100,000,],[$Cash$,,100,000],[$