Fortunes Hotel Associates reported the following income information for the current year:

Account GAAP Tax

Sales $500,000 $500,000

Operating Income (280,000) (280,000)

Depreciation Expense. (70,000) (100,000)

Est. Warranty Cost (30,000) 0

Actual Warranty Repairs 0 (10,000)

Income Before Tax $120,000

Taxable Income $110,000

Tax Rate x35%

Tax Payable $38,500

a. Prepare the journal entry to record the tax provision for the current year.

b. Are there any differences between the federal income tax rate and Fortunes' effective tax rate? Explain.