Arndt, Inc, report the following for 2018 and 2019 ($ in millions):

20182019

Revenues$ 996$1,031

Expenses784824

Pretax accounting income (income statement)$ 212$207

Taxable income (tax return)$210$ 230

Tax rate:40%

a.Expenses each year include $30 million from a two-year casualty insurances policy purchased in 2018 for $60 million.The cost is tax deductible in 20818.

b.Expenses include $3 million insurance premiums each year for life insurance on key executives.

c.Arndt sells one-year subscriptions to a weekly journal.Subscription sales collected and taxable in 2018 and 2019 were $36 million and $48 million, respectively.Subscriptions included in 2018 and 2019 financial reporting revenues were $28 million ($10 million collected in 2017 but not recognized as revenue until 2018) and $36 million, respectively.Hint: View this as two temporary differences-one reversing in 2018: one originating in 2018.

d.2018 expenses included a $22 million unrealized loss from reducing investments (classified as trading securities) to fair value. The investments were sold in 2019.

eDuring 2017, accounting income included an estimated loss of $5million from having accrued a loss contingency. The loss was paid in 2018 at which time it is tax deductible.

f. At January 1, 2018, Arndt had a deferred tax asset of $7 million and no deferred tax liability

2. schedule that reconciles the difference between pretax accounting income and taxable income.Using the schedule, prepare the necessary journal entry to record income taxes for 2018.

2. Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. Using the schedule, prepare the necessary journal entry to record income taxes for 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a schedule that reconciles the difference between pretax accounting income and taxable income. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Current Future Taxable Future ($ in millions) Year 2018 Amounts [2019] Deductible Amounts [2019] Pretax accounting income Permanent difference: Life insurance premiums Temporary differences: Casualty insurance expense Subscriptions-2017 Subscriptions-2018 Unrealized loss Loss contingency Taxable income $ 0 $ Enacted tax rate (%) Tax payable currently Deferred tax liability Deferred tax asset Deferred tax liability Deferred tax asset Ending balances (balances currently needed) Less: Beginning balances Changes needed to achieve desired balances $ 0 $ 0