Ford Co$.$ has pretax financial income $($PFI$)$ of $$20$ for the year ended December $31,$ YR$07.$ Your review of the accounting

and tax records has identified the following differences between pretax financial income $($PFI$)$ and taxable income $($TI$)$:

Depreciation expense for financial purposes is $$8$ while depreciation for tax purposes is $$12.$

The company paid a $$1$ fine related to violation of environmental law. This fine is not tax deductible under current

Federal tax law.

At December $31,$ YR$07$ the company has $$2$ of accrued wages payable. Because the company is a cash$-$basis taxpayer,

these wages will not be deducted for tax purposes until they are paid $($early YR$08).$ Hence, they will be reported and

deducted on the tax return for the year ended December $31,$ YR$08.$

At December $31,$ YR$07$ the company has $$3$ of accounts receivable outstanding. These receivables arose from current

year credit sales. Because the company is a cash$-$basis taxpayer the revenue from these sales will not be taxed until the

receivables are collected in YR$08.$

Given these facts, taxable income $($TI$)$ for the year ended December $31,$ YR$07$ is:

a$.$ $$16$

b$.$ $$20$

c$.$ $$22$

d$.$ $$24$

e$.$ None of the answers provided are correct.