You have been assigned to compute the income tax provision for Wahlgren Reed Furniture, Inc. as of

December $31,2023.$ The company$$s federal income tax rate is $21\%.$

Wahlgren Reed Furniture, Inc. is an accrual method taxpayer that uses the calendar year as its tax year.

Its gross sales for $2023$ were $$500,000,$ and its cost of goods sold were $$150,000.$ In addition to its gross

sales, at the end of the year it received $$50,000$ in advance payments for furniture to be constructed in

January $2024.$ It received $$6,000$ in interest on a municipal bond, and it paid $$5,000$ in interest on a loan

obtained to purchase the municipal bond.

In $2022,$ it purchased machinery with an estimated useful life of $10$ years for $$5,000.$ For GAAP

purposes, Wahlgren depreciates the machinery over $10$ years using the straight$-$line method. Wahlgren

uses $7$ years MACRS and the half year convention to depreciate the machinery for tax purposes. The

machinery has no salvage value.

Wahlgren had $$6,000$ of capital losses and $$2,000$ of capital gains for the year. Wahlgren paid $$15,000$ in

research and experimental expenditures on October $1,2023,$ and elected to amortize the expenditures over

$60$ months for tax purposes. For GAAP purposes, the research and experimental expenditures were fully

expensed in $2023.$ It paid $$3,000$ in premiums for life insurance insuring a key employee and naming the

corporation as the beneficiary. It paid $$10,000$ for business meals during the year $($the meals were in a

restaurant$).$ It received $$20,000$ in dividends from a U$.$S$.$ corporation, it owned $5\%$ of the stock of that

corporation. Based on these facts, complete the following in Excel.

Required:

$1.$ Based upon the above, what is Wahlgren Reed Furniture, Inc.$$s GAAP income and taxable

income for the year ended December $31,2023?$

$2.$ Compute Wahlgren Reed Furniture Inc.$$s current income tax expense $($tax per corporate tax

return$).$

$3.$ Compute Wahlgren Reed Furniture Inc.$$s deferred income tax expense or benefit.

$4.$ Prepare the journal entries for the income tax provision.

$5.$ Prepare the Schedule M$-1$ for Wahlgren Reed Furniture Inc.