Assignment Requirements:

Part 1:Read the business case below.Using this information, prepare:

A)A reconciliation from financial income to taxable income for 2016.

B)The journal entry to record income tax expense, deferred taxes, and income taxes payable for 2016.

C)Proper note disclosure that would accompany the:

a.Balance Sheet (summary of deferred tax assets, deferred tax liabilities, and valuation allowance components)

b.Income Statement (components of income tax expense)

Other Requirements:

All assignments must be typed; hand-written assignments will not be accepted.

All assignment should be organized in a neat and orderly fashion.

All work should be shown for calculations.

Business case and other information are attached.

Written Assignment Assignment Objective: The goal of this assignment is to help you learn how to prepare and interpret financial reports used by US Companies and to understand the quantitative and qualitative information that this reporting provides. Assignment Requirements: Part 1: Read the business case below. Using this information, prepare: A) A reconciliation from financial income to taxable income for 2016. B) The journal entry to record income tax expense, deferred taxes, and income taxes payable for 2016. C) Proper note disclosure that would accompany the: a. Balance Sheet (summary of deferred tax assets, deferred tax liabilities, and valuation allowance components) b. Income Statement (components of income tax expense) Other Requirements: All assignments must be typed; hand-written assignments will not be accepted. All assignment should be organized in a neat and orderly fashion. All work should be shown for calculations. Business Case Warhawk Apparel Company began operations on January 1, 2016. The company, started by sisters Wendy and Wilma Warhawk, manufactures a wide range of UW-Whitewater Warhawk-branded apparel and accessories. Wendy serves as President and CEO, and Wilma serves as Vice President and CFO. Wilma is in the process of reconciling 2016 financial income to taxable income, and has accumulated the following pieces of information: 1. During 2016, Warhawk sold $100,000 of goods to the UWW Bookstore. The UWW bookstore made payments totaling $75,000 during 2016. Warhawk expects to collect the remaining amount in 2017. 2. During 2016, Warhawk paid life insurance premiums of $4,000 (total) for Wendy and Wilma Warhawk. 3. In December 2016, the Whitewater Wal-Mart paid Warhawk $50,000 for goods that were shipped in January 2017. 4. Warhawk guarantees that items will be free of defect upon purchase. During 2016, Warhawk estimated that 2016's sales would require $10,000 (total) in warranty costs in 2016 and 2017. During 2016, actual warranty expenditures were $7,000. 5. During 2016, Warhawk received $600 in interest on the City of Whitewater's municipal bonds. 6. Tax depreciation exceeded book depreciation by $40,000. This difference will reverse equally over 4 years. 7. Pre-tax income in 2016 was $85,000. The tax rate is 30% in 2016 and 2017, and 40% in 2018-2020