taxes of $1,342,000. Timpanogos provided the following information relating to its activities for the year: Life insurance proceeds as a result of CEO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2023 Rental income payments received in 2022 but earned in 2023 Rental income payments received in 2023 but not earned by year-end Tax depreciation Book Depreciation Net capital loss Federal income tax expense for books $200,000 2,000,000 21,000 180,000 300,000 40,000 45,000 15,000 10,000 30,000 55,000 25,000 42,000 310,000 Required: a. Reconcile book income to taxable income for Timpanogos Incorporated. Be sure to start with book income and identify all of the adjustments necessary to arrive at taxable income. \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Revenue from sales } & BookIncome(Dr)Cr & \multirow[t]{2}{*}{Book-taxadjustments(Dr)} & \multirow[t]{2}{*}{Permanent(P)orTemporary(T)} & \multirow[t]{2}{*}{Book-taxadjustmentsCr} & \multirow[t]{2}{*}{Permanent(P)orTemporary(T)} & \multicolumn{2}{|c|}{TaxableIncome(Dr)Cr} \\ \hline & $2,000,000 & & & & & $ & 2,000,000 \\ \hline Cost of goods sold & (300,000) & & & & & & (300,000) \\ \hline Gross profit & $1,700,000 & & & & & $ & 1,700,000 \\ \hline \multicolumn{8}{|l|}{ Other income: } \\ \hline Life insurance proceeds from CEO's death & 200,000 & (200,000) & T & & P & & 0 \\ \hline Interest income on tax-exempt bonds & 40,000 & (40,000) & T & & P & & 0 \\ \hline Net capital loss & 42,000 & & & & & & 0 \\ \hline Rental income & 25,000 & & & & & $ & 25,000 \\ \hline Gross income & $2,007,000 & & & & & $ & 1,725,000 \\ \hline \multicolumn{8}{|l|}{ Expenses: } \\ \hline Interest paid to obtain tax-exempt bonds & 45,000 & & & & & & 45,000 \\ \hline Depreciation & 25,000 & & & & & & \\ \hline Life insurance premiums & 21,000 & & & & & & 21,000 \\ \hline Federal income tax expense & 310,000 & & & & & & 0 \\ \hline Total expenses before charitable contribution, NOL, and DRD & 401,000 & & & & & & 66,000 \\ \hline Income before charitable contribution, NOL, and DRD & $3,522,000 & & & & & & \\ \hline \multicolumn{8}{|l|}{ NOL carryover from prior year } \\ \hline Taxable income for charitable contribution limitation purposes & & & & & & $ & 0 \\ \hline \multicolumn{8}{|l|}{ Charitable contributions (after 10% limit) } \\ \hline Book or Taxable income & $3,522,000 & $(240,000) & & 0 & & $ & 0 \\ \hline \end{tabular} taxes of $1,342,000. Timpanogos provided the following information relating to its activities for the year: Life insurance proceeds as a result of CEO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2023 Rental income payments received in 2022 but earned in 2023 Rental income payments received in 2023 but not earned by year-end Tax depreciation Book Depreciation Net capital loss Federal income tax expense for books $200,000 2,000,000 21,000 180,000 300,000 40,000 45,000 15,000 10,000 30,000 55,000 25,000 42,000 310,000 Required: a. Reconcile book income to taxable income for Timpanogos Incorporated. Be sure to start with book income and identify all of the adjustments necessary to arrive at taxable income. \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Revenue from sales } & BookIncome(Dr)Cr & \multirow[t]{2}{*}{Book-taxadjustments(Dr)} & \multirow[t]{2}{*}{Permanent(P)orTemporary(T)} & \multirow[t]{2}{*}{Book-taxadjustmentsCr} & \multirow[t]{2}{*}{Permanent(P)orTemporary(T)} & \multicolumn{2}{|c|}{TaxableIncome(Dr)Cr} \\ \hline & $2,000,000 & & & & & $ & 2,000,000 \\ \hline Cost of goods sold & (300,000) & & & & & & (300,000) \\ \hline Gross profit & $1,700,000 & & & & & $ & 1,700,000 \\ \hline \multicolumn{8}{|l|}{ Other income: } \\ \hline Life insurance proceeds from CEO's death & 200,000 & (200,000) & T & & P & & 0 \\ \hline Interest income on tax-exempt bonds & 40,000 & (40,000) & T & & P & & 0 \\ \hline Net capital loss & 42,000 & & & & & & 0 \\ \hline Rental income & 25,000 & & & & & $ & 25,000 \\ \hline Gross income & $2,007,000 & & & & & $ & 1,725,000 \\ \hline \multicolumn{8}{|l|}{ Expenses: } \\ \hline Interest paid to obtain tax-exempt bonds & 45,000 & & & & & & 45,000 \\ \hline Depreciation & 25,000 & & & & & & \\ \hline Life insurance premiums & 21,000 & & & & & & 21,000 \\ \hline Federal income tax expense & 310,000 & & & & & & 0 \\ \hline Total expenses before charitable contribution, NOL, and DRD & 401,000 & & & & & & 66,000 \\ \hline Income before charitable contribution, NOL, and DRD & $3,522,000 & & & & & & \\ \hline \multicolumn{8}{|l|}{ NOL carryover from prior year } \\ \hline Taxable income for charitable contribution limitation purposes & & & & & & $ & 0 \\ \hline \multicolumn{8}{|l|}{ Charitable contributions (after 10% limit) } \\ \hline Book or Taxable income & $3,522,000 & $(240,000) & & 0 & & $ & 0 \\ \hline \end{tabular}