Red Corporation has the following preliminary trial balance, before recording the tax provision.

$20192020$

Cash $ $170,300$ $ $185,750$

Accounts Receivable $153,000540,000$

Allowance for bad debts $(12,000)(17,500)$

Fixed Assets $850,000950,000$

Accumulated Depreciation $(200,000)(350,000)$

Deferred Tax Asset $$

Accounts Payable $(654,100)(434,550)$

Accrued Vacation $(30,000)(10,500)$

Incentive Bonus Payable $(80,000)(80,000)$

Accrued Payroll $(25,000)(34,000)$

Income Taxes Payable $(2,000)(20,000)$

Deferred Tax Liability $(35,285)(35,285)$

APIC $(60,000)(87,000)$

Common Stock $(10,000)(10,000)$

Retained Earnings $(64,915)(64,915)$

Revenue $(3,360,700)$

Payroll Expense $450,000$

Purchases $110,000$

Insurance $350,000$

Officers Life insurance $2,700$

Payroll Taxes $450,000$

Bad Debt Expense $9,500$

Travel $50,000$

Meals and Entertainment $60,000$

Rent $650,000$

Office Supplies $600$

Depreciation $150,000$

Marketing Costs $125,000$

Other Expenses $350,000$

Penalties $8,000$

Interest Income $(3,100)$

Interest Expense $48,000$

Income tax Expense $18,000$

Other facts for Red Corporation:

$-$ The federal statutory income tax rate is $21\%$ for both years.

$-$ Red Corporation operates in multiple states. The weighted average statutory state income tax rate is $7\%$ for both years.

$-$ Book income including preliminary income tax expense of $$18,000$ is $$532,000.$

$-$ Tax depreciation for the year ended $2020$ is $$500,000.$

$-$ Red Corporation's cost basis in fixed assets for book and tax is the same.

$-$ Red Corporation's pre$-$tax temporary difference in fixed assets at year$-$end $2019$ was $$175,000$ book$>$tax basis.

$-$ None of Red Corporation's $2019$ vacation accrual was paid within the first $2\mathrm{.}5$ months of $2020,$ and none of the $2020$ vacation accrual is expected to be paid in the first $2\mathrm{.}5$ months of $2021.$

$-$ All of Red Corporation$$s $2019$ bonuses and payroll were paid out within the first $2\mathrm{.}5$ months of $2020,$ and Red Corporation's expectation is to do this again in $2021.$

$-$ Red Corporation is the beneficiary of the officers' life insurance contract$($s$).$

$-$ Interest income is from other than municipal bonds, so is taxable.

REQUIREMENTS: Using the trial balance and the above information, complete the following. $($NOTE: Show your work and calculation process for each of the question$)$

$1.$ Compute $2020$ federal taxable income.

$2.$ Compute the state statutory income tax rate net of the federal benefit.

$($State statutory rate net of federal benefit to four decimal places, e$.$g$.\mathrm{.}2111)$

$3.$ Calculate the total $2020$ current income tax provision.

$($Total current income tax expense is $\_\_\_\_\_\_\_\_)$

$4.$ Prepare an inventory of deferreds using the template below.

Inventory of Deferreds $$

$$ Pre$-$tax $2019$ Current Activity Pre$-$tax $2020$ Tax$-$effected $2020$

$$

Insert temp differences here $$

$$

$$

$$

$$

Total pre$-$tax $$

Tax Rate $$

Total tax$-$effected $$

Tax$-$effected DTL balance at $12/31/20$ is $\_\_\_\_\_\_\_\_\_$

$5.$ Compute the total $2020$ deferred income tax provision. $($Deferred income tax expense$)$

$6.$ Compute the $2020$ effective tax rate

$($Effective tax rate to four decimal places, e$.$g$.\mathrm{.}2111)$

$7.$ Prepare a $2020$ effective tax rate reconciliation using the template below$$

Effective Tax Rate Reconciliation $$

$$ Red

$$ Pre$-$tax Tax$-$effected

$$

Pretax book income $$

State income tax expense $$

Permanent differences $$