30. (8 points) At the end of its first year of operations (2020), Z reported the following:

Pretax (GAAP-based) financial income for 2020 $750,000

Book depreciation of $50,000 and tax depreciation of $110,000

Interest income on municipal bonds for the year 3,000

Prepaid rental expense as of 12-31-20 5,000

Accrued warranty expense payable as of 12-31-20 8,000

Fine expense/penalty for violating a federal law 75,000

Pension expense on Hs defined benefit plan for the year 21,000

Contributions made to Hs defined benefit pension plan during the year 10,000

Unrealized holding loss for the year on a trading investment security 8,000

The excess depreciation reverses as follows: $10,000 in 2021; $20,000 in 2022; $30,000 in 2023. Z expects the unrealized holding loss is expected to reverse in 2021. Z expects all other temporary differences reverse evenly in 2021 and 2022.

Enacted tax rates are as follows: 2020: 21% 2021: 22% 2022: 22% 2023: 23%

Prepare a schedule reconciling Zs 2020 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 Rs income tax expense, deferred taxes, and income taxes payable for 2020.

In addition, reconcile Zs pretax income amount at 2020s income tax rate with the income tax expense amount Z will report on its 2020 income statement.