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Kit Kat Ltd began operations in 2020. The following information is available for this company: Pretax financial income for 2020 is $289,771 Differences between the

Kit Kat Ltd began operations in 2020. The following information is available for this company:
Pretax financial income for 2020 is $289,771
Differences between the 2020 income statement and tax return include:
1. Depreciation on property, plant and equipment for financial reporting purposes, was $41,318. Depreciation
on the tax return is $52,498
2. Interest revenue of $1,827 was recognized on an investment in tax-exempt municipal bonds
3. Warranty expense accrued for financial reporting purposes was $2,785. Warranty expense per the tax return
amounts to $1,500
4. Gross profit on construction contracts using the percentage-of-completion mehod was $73,500
Gross profit on construction projects for tax purposes was $65,208
5. A $1,500 fine paid for violation of OSHA safety regulations was deducted in computing pretax financial income
6. The company has life insurance policies on its key persons. The premium expensed on the financial statements was $3,600
7. One of the executives covered by a key person policy was killed in a car accident. The company received a death
payment of $75,000 from the insurance company, which the company reported as Other Income and Gains on its financial records.
8. The applicable tax rate is 24%
9 Taxable net income is expected in the net few years
Instructions: (Round you calculations to the nearest whole dollar)
a) For each of the differences above, calculate the dollar amount of the difference and identify if it is a temporary difference or pemanent difference
b) Compute Taxable income for 2020
c) Compute the deferred tax asset and liabilities at December 31, 2020 that relate to the temporaty differences described above
d) Prepare the journal entry to record income tax expense, deferred taxes and income tax payable for 2020
Leave any lines you don't need blank. Select the accounts from the dropdown list, which is in alphabetical order.
If you accidently select an account in a row that you want blank, simply select that cell and press the DELETE key.
Do not worry about indenting the account names to be credited
Place any work you widh to show below the box containing Answer D

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