You have been assigned to compute the income tax provision for a corporation. The companys income statement for 2017 is as follows:

Net Sales 151,730,000

Cost of Sales 103,410,000

Gross Profit 48,320,000

Other Income:

Dividends 2,300,000

Interest 1,113,000

Total Other Income 3,413,000

Gross Income 51,733,000

Expenses:

Compensation 14,100,000

Depreciation 2,913,000

Charitable Donations 63,000

Meals and Entertainment 164,800

Other Expenses 2,200,000

Total Expenses 19,440,800

Pre-tax Income 32,292,200

You have identified the following:

Interest from municipal bonds 63,000

Dividend Received Deduction 1,610,000

DPAD 230,000

Corporation prepared the following schedule of temporary differences from the beginning of the year to the end of the year:

Taxable Temp Differences	BOY Cumulative T/D	Beginning Deferred Taxes @ 34%	Current Year Change	EOY Cumulative T.D.	Ending Deferred Taxes @ 34%
Accum. Depre	(5,175,000)	(1,759,500)	(845,000)	(6,020,000)	(2,046,800)
Total	(5,175,000)	(1,759,500)	(845,000)	(6,020,000)	(2,046,800)
Deductible Temporary Differences	BOY Cumulative T/D	Beginning Deferred Taxes @ 34%	Current Year Change	EOY Cumulative T.D.	Ending Deferred Taxes @34%
Allowance for Bad Debts	115,000	39,100	17,500	132,500	45,050
Accrued Warranties	157,500	53,550	63,000	220,500	74,970
Charitable Contributions	111,000	37,740	34,500	145,500	49,470
Deferred Compensation	425,000	144,500	(212,000)	213,000	72,420
Total	808,500	274,890	(97,000)	711,500	241,910

Required:

1. Compute the current income tax expense or benefit for the corporation assuming a 34% tax rate.

2. Compute the corporation deferred income tax expense or benefit.

3. Prepare a reconciliation of the corporation total income tax provision with its hypothetical income tax expense in both dollars and rates (compute the rate to the nearest hundredth of a percent (e.g., 31.23%)).

4. Assume the corporation tax rate for the current year decreased to 25%. Re-compute the corporation deferred income tax expense or benefit for 2017 using the template below (FILL IN THE BLANKS):

Taxable Temp Differences	BOY Cumulative T/D	Beginning Deferred Taxes @ 34%	Current Year Change	EOY Cumulative T.D.	Ending Deferred Taxes @25%
Accumulated Depreciation	(5,175,000)	(1,759,500)	(845,000)	(6,020,000)
Total	(5,175,000)	(1,759,500)	(845,000)	(6,020,000)
Deductible Temporary Differences	BOY Cumulative T/D	Beginning Deferred Taxes @ 34%	Current Year Change	EOY Cumulative T.D.	Ending Deferred Taxes @25%
Allowance for Bad Debts	115,000	39,100	17,500	132,500
Accrued Warranties	157,500	53,550	63,000	220,500
Charitable Contributions	111,000	37,740	34,500	145,500
Deferred Compensation	425,000	144,500	(212,000)	213,000
Total	808,500	274,890	(97,000)	711,500