Banjo Corporation is a subchapter C corporation located in Champaign, IL, and is a client of your accounting firm. Banjo Corp. manufactures and sells musical instruments through their webstore and physical location. The manager on the engagement assigned you to prepare the book to tax reconciliation below. The manager would like to remind you that the reconciliation format should be such that the column labeled "Book", which is Banjo's book profit and loss statement, plus the column labeled "Book-tax differences" should equal the column labeled "Tax"(sign +/- matters). Banjo typically has gross income much greater than $26m and is therefore required to use accrual basis for tax purposes. Show your work for calculations and any potential limitations. Banjo Corp. Profit and Loss for the Year Ended December 31, 2022 Book Book-tax Difference Tax Sales $ 125,350,000 Interest income $ 1,200,000 Income from Investments $ 8,000,000 Capital gain (loss) $ (3,750,000) Salaries $ (50,000,000) Employee benefits $ (12,000,000) Utilities $ (800,000) Repairs and maintenance $ (2,500,000) Supplies $ (17,000,000) Rent $ (10,000,000) Bad debt expense $ (800,000) Insurance $ (1,500,000) Meals $ (900,000) Entertainment $ (825,000) Travel $ (1,100,000) Business interest expense $ (7,500,000) Charitable contributions $ (5,000,000) Depreciation $ (10,000,000) DRD Net $ 10,875,000 Additional information about Banjo Corp: 1. All of the charitable contributions were made in cash. 2. Meals all had a valid business purpose and were furnished by a restaurant. 3. Entertainment was for various activities during which Banjo conducted meetings with important customers and suppliers. 4. Banjo had no floor plan financing. 5. Interest income included $210,000 from a Cook County bond issue to fund municipal property improvements. 6. A review of the accounts receivable subledger revealed the following accounts that are deemed to be uncollectible: a. Jack Rabbit Studios $115,000 b. Miles of Chords $250,000 c. National Instrument Sales $155,000 d. Barry's Banjo Bin $627,000 e. Power Notes $323,000 7. Banjo received $2,500,000 of dividends from Billy's Band, Inc. in which Banjo owns a 3% share. 8. Banjo also received $2,800,000 of dividends from Musical Manny's, Inc. in which Banjo owns at 40% share. Included in Income from Investments is $5,750,000 which is Banjos 40% share of Musical Mannys income. 9. Banjo's MACRS depreciation schedule shows a total of current year depreciation of $9,250,000. 10. Not included in the MACRS depreciation is the cost recovery for the following assets placed in service during 2022 (these were the only assets placed in service during the year). Banjo would like to elect not to claim bonus depreciation or Section 179 expense: Asset Date Cost computer equipment 4/2/2022 $150,000 delivery truck 11/12/2022 $250,000 storage building 3/12/2022 $4,000,000 11. Banjo's CEO has a compensation package which included the following expenditures for 2022: a. Cash compensation $700,000 b. Performance bonus $232,000 c. Non-taxable fringe benefits $250,000 d. Taxable fringe benefits $426,000 12. Travel includes expenditures all have a valid business purpose.