1- WHY are the journal entry debits and credits to DIT exactly the same in Requirement #3 for all five years as they were in the Basic Illustration? your answer must be 30 words or lessl REQUIREMENT #3 Use the information from the Basic Illustration EXCEPT that a permanent difference, municipal bond interest, has been added for three of the years. Municipal bond interest is income for book purposes, but NEVER for tax purposes Thus, it is a PERMANENT difference. Calculation of DIT NBV - T/R Table 2 NBV - F/S-Table 3 depreciation difference cumulative DIT x 33% increase> or decrease in DIT | (14,740> 20X120X2 20X3 20X4 20X5 243,333 149,988 79,988 33,315 0- 288,000216,000 144,000 72,000 0 44,667 66,012> 64,012> | | | 12,766> |-O. 2 - WHy is the Income Tax Payable amount for 20X1, 20X3, and 20x4 smaller in Requirement #3 than in the Basic Illustration even though Book Income Before Tax is identical? Again, your answer must be 30 words or less! 7,044> | 660 8,358 12,766 Calculation of Income Tax 20X 20X2 20X3 20X4 20X5 Total 80,000 82,000 84,000 86,000 88,000 420,000 20 3-Why is Income Tax Payable for 20X1 a total of $6,600 less for Requirement #3 compared to the Basic Illustration ($11.660-$5,060: $6,600)? your answer should be in the form of a mathematical proof as to what is causing the6.600 difference. Book Income Bond Interest $1 -0. | reciation diff |-44,667) | 2,000 | 25,327| 38,685 Taxable Income 15333 60,655 78,500 110,327 126,685 391500 Income lax le 5,060 20,016 25,905 36,408 41,806 129,195 Journal entry (debit and scredit) 20X1 | 20X2 | 20X3 20X4 | 20X5 Income Tax Expense 19,800 27,060 25,245 28,050 29,040 DIT Income Tax Pay ole | | 20,016> |25,905> :36,408> 41,806> | Book Inc Before Tax 80,000 82,000 84000 86,000 88,000 effective tax rate | 24.75%| 33.00% | 30.05%| 32.61%| 33.00% 4-wHy (ie.. what caused) the effective tax rate to be 30.05% in 20X3 rather than 33.00%? Be sure your calculation shows how the 30.05% is determined-this does NOT mean your answer is "you divide Income Tax Expense by Book Income ReforTax". The "issue" to address is WHY it is 30.05% rather than 33.00%. Your answer should be in the form of a mathematical explanation of what is causing the 2.95% difference. (14,740>| 07,044> 660 8,358 12,766 In the spaces provided on the next page you are to answer the following questions