Prepare a Federal Tax Provision and related tax accounts for financial statement purposes using excel model provided. DO NOT prepare any state tax income tax amounts. You will need to compute income tax expense both current and deferred, federal taxes payable and deferred tax assets or liability. You will need to record the tax accounts to close the financial statements. Please provide the journal entities. The tax return taxable income will be the same as the tax provision amounts. Thus, no return to provision differences will exist.

Corporate Tax Return

You will need to prepare Form 1120 for federal tax purposes for Reed Enterprises, Inc. for tax year 2022. DO NOT prepare any state tax returns. The return should include the 1120 and related statements/schedules/forms and forms 1125-A, 1125-E, Schedule D and form 4562. Prepare Schedule M-1. DO NOT PREPARE Schedule M-3 even though that would be required.

Narrative

You will need to prepare an explanation write up on how you treated the items is the facts above for tax provision and tax return purposes. The explanation is meant to determine if you understand the relationship between the tax provision and related accounts and form 1120. Please explain how you determined what is taxable, not taxable, deductible, or not deductible. Also, provide detail computations of your permanent and temporary differences and any other facts in the case. Provide your journal entries in your write up. Provide any observations and planning ideas you have for the Company. Your write up should be a single-spaced memorandum format and should be at least 4 pages (minimum).

Use the appropriate authorities to document your conclusions. Without authorities you will not receive any credit for the assignment. If the facts aren't in the case, please make your own assumptions and document them. All deductions will be computed using the benefits of the CARES ACT if applicable.

This assignment is worth 150 points. Please upload your assignment into Canvas by the due date. Deliverables include the Provision calculation (excel), 1120 and related forms and your narrative memorandum.

additions Balance Sheet Cash Accounts Receivable \begin{tabular}{r} 12/31/2021 \\ \hline 1,500,000 \\ 2,500,000 \end{tabular} Bad Debt Allowance Inventories Stock Investment Muni Bonds CDs Office Equipment Accumulated Depreciation Deferred Tax Asset 2,500,000 Total Assets 54,000,000 TBD Accounts Payable ** Legal Settlement Reserve Federal Tax Payable Line Of Credit Capital Stock 5,000,0004,000,00040,000,0009,500,0007,500,0008,213,1004,000,00075,000,000 Retained Earnings 5,000,000 TBD Total Liabilities and Equity ** Includes borrowing for Tax Exempt Bonds INCOME TAX PROVISION EXAMPLE PCC Exhibit 5-7 \begin{tabular}{|l|c|c|c|} \hline & Dr (Cr) & Dr (Cr) & \\ \hline PROVISION & PAYABLE & DEFERRED & Check \\ \hline \end{tabular} Pre-Tax Income 6,017,000(6,017,000) \begin{tabular}{|l|r|r|} \hline Gross Profit & 22,000,000 & \\ \hline Interest Income & 120,000 & \\ \hline Capital Loss & {28,000} & \\ \hline Gain on sale & 54,000 & \\ \hline Dividends & 30,000 & 22,176,000 \\ \hline \end{tabular} Permanent Items: Dividends Received Deduction Nondedutible Meals \& Entertainment Life Insurance Premiums \begin{tabular}{|l|r|r|} \hline & & \\ \cline { 2 - 3 } & Eividends & \\ \hline Expenses & (17,459,000) & \\ \hline Federal Income Tax & 2,000,000 & \\ \hline Charitable & (700,000) & (16,159,000) \\ \hline \end{tabular} Tax-Exempt interest income \begin{tabular}{|l|r|r|r|} \hline Pre-tax Income & 6,017,000 & \\ \hline Permanent Differences & 36,000 & 36,000 & w/o DRD \\ \hline \end{tabular} Temporary ltems: NOL Charitable Contributions \begin{tabular}{|l|c|c|c|} \hline Temporary Differences & (466,000) & (466,000) & w/o NOL and Charity \\ \hline Charitable & & 700,000 & \\ \hline NOL carryover & (24,000) \\ \hline \end{tabular} Deferred Compensation Stock Compensation Bad Debts Warranty expense Capital Loss Gain on sale of assets Depreciation Taxable Income Tax Rate Income Tax JOURNAL ENTRIES: Current Income Tax Expense (Benefit) Current Income Tax Receivable (Payable) Deferred Income Tax Expense (Benefit) Deferred Income Tax Asset (Liability) TOTAL INCOME TAX EXPENSE (BENEFIT) \begin{tabular}{|r|r|r|r|} \hline 21% & 1,267,980 & (1,180,557) & (87,423) \\ \hline & & & \\ \hline & 1,180,557 & & \\ \hline & & (1,180,557) & \\ \hline & 87,423 & & \\ \hline & & & (87,423) \\ \hline Check & 1,267,980 & (1,180,557) & (87,423) \\ \hline \end{tabular} EFFECTIVE TAX RATE RECONCILIATION \begin{tabular}{|l|r|r|r|r|r|} \hline Expected Tax Provision (benefit) at Statutory Tax Rate & 6,017,000 & 21% & 1,263,570 & 21.0% & 63,179 \\ \hline Dividends Received Deduction & (15,000) & 21% & (3,150) & 0.1% & \\ \hline Nondedutible Meals \& Entertainment & 14,000 & 21% & 2,940 & 0.0% & \\ \hline Life Insurance Premiums & 34,000 & 21% & 7,140 & 0.1% & \\ \hline Tax-Exempt interest income & (12,000) & 21% & (2,520) & 0,0% \\ \hline Income Tax Provision (Benefit) & ETR & 21% & 1,267,980 & 21.1% \\ \hline & & & \\ \hline \end{tabular} TAXACCOUNTS: Beginning of the year CY tax provision Estimated Tax Payments made End of the year balance Ena ortu yoar bairice