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Pine Company has pretax financial (book) income of $150,000 for the year 2016. the tax rate for all years is 30%. the records for Pine

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Pine Company has pretax financial (book) income of $150,000 for the year 2016. the tax rate for all years is 30%. the records for Pine Company show this data for 2016: Gross profit on installment sales recorded on the books was $ 100,000. Gross profit from cash collections (tax basis) of installment receivables was $50,000. A $60,000 contingent loss on a lawsuit expected to be settled in 2019 was accrued in 2016. No tax deduction is permitted for this loss until actually paid. Machinery was acquired in January for $ 160,000. Straight-line depreciation over a ten-year life (no salvage value) is used for book purposes. For taxes, MACRS depreciation is used and Pine may deduct $22, 400 for 2016. the estimated warranty expense for book purposes related to 2016 sales was $20,000. Repair costs paid out under warranties during 2016 were $ 10,000. the remainder is expected to be paid out in 2017. Only cash actually paid out is deductible for tax purposes. Required: Prepare a schedule starting with pretax financial income and compute taxable income. Prepare the journal entry to record income taxes for 2016

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