You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2019. The company’s income statement for 2019 is provided below: (Leave no answer blank. Enter zero if applicable.)

Tulip City Flowers Inc. Statement of Operations at December 31, 2019

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 $ 10,000

Nondeductible stock compensation $ 5,000

Nondeductible fines $ 1,000

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

Tulip City Flowers Inc. Temporary Difference Scheduling Template Taxable Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Accumulated depreciation $(1,050,000) $(500,000) $(5,500,000) $(1,155,000)

Deductible Temporary Differences BOY Deferred Taxes Current Year Change EOY Cumulative T/D EOY Deferred Taxes Allowance for bad debts $21,000 $10,000 $110,000 $23,100 Prepaid income 0 20,000 20,000 4,200

Deferred compensation 10,500 10,000 60,000 12,600

Accrued pension liabilities 105,000 100,000 600,000 126,000

Total $136,500 $140,000 $790,000 $165,900

_{Required: Compute TCF’s current income tax expense or benefit for 2019.}

Compute TCF’s deferred income tax expense or benefit for 2019.

Prepare a reconciliation of TCF’s total income tax provision with its hypothetical income tax expense of 21 percent in both dollars and rates.

 

a. Compute TCF's current income tax expense or benefit for 2019. b. Compute TCF's deferred income tax expense or benefit for 2019. Current income tax expense $ 873,810 . b. Total income tax provision $ 949,410