Problem 2 Wise AG began operations at the beginning of 2019. The following information pertains to this company. 1. Pretax financial income for 2019 is 100,000. 2. The tax rate enacted for 2019 and future years is 40%. 3. Differences between the 2019 income statement and tax return are listed below: a. Warranty expense accrued for financial reporting purposes amounts to 7,000. Warranty deductions per the tax return amount to 2,000. b. Income on construction contracts for book purposes amounts to 92,000. Income on construction contracts for tax purposes amounts to 67,000. 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 recognized on an investment in tax-exempt bonds amounts to 1,500. 4. Taxable income is expected for the next few years. Instructions a. Compute taxable income for 2019. b. Compute the deferred tax asset or liability at December 31, 2019, that relate to the temporary differences described above. c. Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2019. d. Draft the income tax expense section of the income statement, beginning with "Income before income taxes