29. (9 points) At the end of its first year of operations (2019), Ace reported the following:

Pretax (GAAP-based) financial income for 2019 $2,100,000

Book depreciation of $150,000 and tax depreciation of $310,000

Fine expense/penalty for violating a federal law 100,000

Interest income on municipal bonds for the year 7,000

Prepaid rental expense as of 12-31-19 16,000

Unearned revenue as of 12-31-19 40,000

Accrued warranty expense payable as of 12-31-19 33,000

Investment income on Aces 40% ownership in Oster Companys common stock; during 2019, Oster

did not declare any dividends on its common stock. 75,000

Pension expense on Aces defined benefit plan for the year 95,000

Contributions made to Aces defined benefit pension plan during the year 80,000

Bad debt expense for the year 10,000

Write-offs during the year 7,000

Unrealized holding loss for the year on an available-for-sale investment security 6,000

Ace expects the excess depreciation to reverse as follows: $30,000 in 2020; $45,000 in 2021; $70,000 in 2022; $15,000 in 2023.

Ace expects the unrealized holding loss to reverse in 2022.

Ace expects the accrued warranty expense payable to reverse as follows; $13,000 in 2020; $11,000 in 2021; $9,000 in 2022.

Ace expects the prepaid rent will be used up in 2020 and the unearned revenue will be earned evenly during 2020 and 2021.

Ace expects all other temporary differences to reverse evenly in 2020, 2021, and 2022.

Enacted tax rates are as follows: 2019: 25% 2020: 22% 2021: 21% 2022 and thereafter: 20%

Prepare a schedule reconciling Aces 2019 pretax financial income to its taxable income. Identify EACH item in your reconciliation as a permanent difference or a temporary difference. If the item is a temporary difference, indicate if it creates a deferred tax asset or a deferred tax liability. Prepare the journal entry to record Aces income tax expense, deferred taxes, and income taxes payable for 2019.

In addition, reconcile Aces pretax income amount at 2019s income tax rate with the income tax expense amount Ace will report on its 2019 income statement.