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You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2020. The company's income statement
You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2020. The company's income statement for 2020 is provided below: (Leave no answer blank. Enter zero if applicable.) Tulip City Flowers Inc. Statement of Operations at December 31, 2020 Net sales $20,000,000 Cost of sales 12,000,000 Gross profit $ 8,000,000 Compensation 500,000 Selling expenses 750,000 Depreciation and amortization 1,250,000 Other expenses 1,000,000 Total operating expenses $ 3,500,000 Income from operations $ 4,500,000 Interest and other income 25,000 Income before income taxes $ 4,525,000 $ You identified the following permanent differences: Interest income from municipal bonds Nondeductible stock compensation Nondeductible fines $10,000 $ 5,000 $ 1,000 TCF prepared the following schedule of temporary differences from the beginning of the year to the end of the year: Taxable Temporary Differences Accumulated depreciation Tulip City Flowers Inc. Temporary Differences Scheduling Template BOY Current Deferred Year Taxes Change $(1,050,000) $(500,000) EOY Cumulative T/D $(5,500,000) EOY Deferred Taxes $(1,155,000) Deductible Temporary Differences Allowance for bad debts Prepaid income BOY Deferred Taxes $21,000 Current Year Change $10,000 20,000 EOY Cumulative T/D $110,000 20,000 EOY Deferred Taxes $23,100 4,200 Deferred compensation Accrued pension liabilities Total 10,500 105,000 $136,500 10,000 100,000 $140,000 60,000 600,000 $790,000 12,600 126,000 $165,900 Required: a. Compute TCF's current income tax expense or benefit for 2020. b. Compute TCF's deferred income tax expense or benefit for 2020. c. Prepare a reconciliation of TCF's total income tax provision with its hypothetical income tax expense of 21 percent in both dollars and rates. Complete this question by entering your answers in the tabs below. Req A and B Reqc a. Compute TCF's current income tax expense or benefit for 2020. b. Compute TCF's deferred income tax expense or benefit for 2020. a. b. Req A and B Reqc > Req A and B Reqc Prepare a reconciliation of TCF's total income tax provision with its hypothetical income tax expense of 21 percent in both dollars and rates. (Round your percentage answers to 2 decimal places. Amounts to be deducted should be indicated by a minus sign. Do not round intermediate values.) Reconciliation of Effective Tax Rate Dollars Percent Tax provision before adjustments % % % % % Income tax provision
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