King Company began operations at the beginning of 2017. The following information pertains to this company. 1. Pretax financial income for 2017 is $100,000. 2. The tax rate enacted for 2017 and future years is 40%. 3. Differences between the 2017 income statement and tax return are listed below: a. Warranty expense accrued for financial reporting purposes amounts to $5,000. Warranty deductions per the tax return amount to $2,000. b. Gross profit on construction contracts using the percentage-of-completion method for books amounts to $92,000. Gross profit on construction contracts for tax purposes amounts to $62,000. c. Depreciation of property, plant, and equipment for financial reporting purposes amounts to $60,000. Depreciation of these assets amounts to $80,000 for the tax return. d. A $3,500 fine paid for violation of pollution laws was deducted in computing pretax financial income. e. Interest revenue earned on an investment in tax-exempt municipal bonds amounts to $1,300. 4. Taxable income is expected for the next few years. Instructions: (a) Prepare the reconciliation schedule for 2017 and future years. (b) Prepare the journal entry to record income tax expense for 2017. (c) Prepare the income tax expense section of the income statement beginning with Income before income taxes. (d) Determine how the deferred taxes will appear on the balance sheet at the end of 2017.