Crane Company began operations at the beginning of 2021. The following information pertains to this company.

1.

Pretax financial income for 2021 is $91,000.

2.

The tax rate enacted for 2021 and future years is 20%.

3.

Differences between the 2021 income statement and tax return are listed below:

(a)

Warranty expense accrued for financial reporting purposes amounts to $6,900. Warranty deductions per the tax return amount to $1,900.

(b)

Gross profit on construction contracts using the percentage-of-completion method per books amounts to $86,200. Gross profit on construction contracts for tax purposes amounts to $67,000.

(c)

Depreciation of property, plant, and equipment for financial reporting purposes amounts to $63,100. Depreciation of these assets amounts to $83,800 for the tax return.

(d)

A $3,100 fine paid for violation of pollution laws was deducted in computing pretax financial income.

(e)

Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,300.

4.

Taxable income is expected for the next few years. (Assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.)