For each of the following independent items, indicate whether the item creates a temporary difference (T)or permanent difference (P) between financial income and taxable income. For each temporary difference,indicate whether the item is a future taxable amount (FTA) or future deductible amount (FDA), andwhether an item would create a deferred tax asset (DTA) or deferred tax liability (DTL). For eachpermanent difference, indicate whether the item is nontaxable (NT) or nondeductible (ND).____________________a) Tax depreciation in excess of book depreciation, $150,000____________________b) Excess of income on installment sales over income reportable for taxpurposes, $130,000____________________c) Premium payment for life insurance policy on president, $95,000____________________d) Rent collected in advance of period earned, $75,000____________________e) Warranty provision accrued in advance of period paid, $40,000____________________f) Interest revenue received on municipal bonds, $30,000

(1) For the item e), warranty, explain how warranty provision impacts taxable income in the books,and how it affects taxable income reported to the IRS. What is the timing of actual tax paid/savedin relation to warranty costs?

(2) Based on the information above, and assuming pretax financial income of $3,100,000, computetaxable income. Assume first year of operations.Pretax financial Income___________________________________________________Permanent Differences:Less: DTLs:Add: DTAs:Taxable Income__________________________________________________________

(3) Prepare the necessary journal entry to update the firm's tax accounts. Assume a tax rate of 35%